Rwanda proposes new rules for digital currencies like Bitcoin and Ethereum
In a significant move towards financial regulation, Rwanda's Capital Markets Authority (CMA) has enforced draft regulations for virtual assets, effective from March 3, as stated in a recent circular. This development comes following a series of announcements and consultations regarding the regulation of virtual assets in the country.
Under the new regulations, Virtual Asset Service Providers (VASPs) in Rwanda are now required to apply for licenses from the CMA to operate legally. Failure to comply could result in fines of up to 30 million Rwandan francs ($21,000) and imprisonment for up to five years.
While the specific requirements for VASPs to obtain licenses under the Rwandan draft law have not been explicitly detailed, we can infer some general expectations based on similar jurisdictions. Companies offering services such as crypto exchanges, digital wallets, token or NFT issuance, OTC trading, and crypto payment processing would likely need to apply for a VASP license.
The licensing process is expected to involve submitting an application to the competent authority, in this case, the Capital Markets Authority. Key requirements for obtaining a license typically include compliance with anti-money laundering (AML) and know-your-customer (KYC) standards, maintaining robust cybersecurity measures, and implementing internal risk management frameworks.
Licensed VASPs are expected to maintain regulatory compliance, including transaction reporting and client fund protection. Having a proper legal company structure, focusing on limited liability entities, is also necessary to ensure institutional accountability. The license facilitates access to financial services, builds client and investor trust, and provides a legal base for operations and possible licensing in other jurisdictions.
It's important to note that the details of the licensing requirements for VASPs in Rwanda are yet to be disclosed, and consulting the CMA's official publications or legal announcements directly would be necessary for the most precise and updated information.
Cryptocurrency mining activities, crypto automated teller machines (ATMs), and VASPs providing mixing services are banned in the country. The regulatory document also includes guidelines for the issuance of initial coin offerings, tokenized real-world assets, and stablecoins.
The authorities have called for public comments on the new law to be submitted before March 14, and a virtual consultation meeting regarding the draft law is scheduled to take place on March 17. The law's passing was motivated by the Financial Action Task Force's warning on the money laundering risks that crypto poses.
Last year, the governor of the National Bank of Rwanda announced that the bank was working on crypto regulations. The enforcement of the travel rule among licensed VASPs and regulators is also mandated by the law. Despite these developments, cryptocurrencies are still not admissible as legal tender in Rwanda.
[1] [Link to the source 1] [2] [Link to the source 2]
- The Capital Markets Authority (CMA) in Rwanda has introduced new regulations for Virtual Asset Service Providers (VASPs), requiring them to apply for licenses to operate legally, as a part of the country's efforts to regulate virtual assets in finance and business.
- Under these new regulations, companies involved in activities such as crypto exchanges, digital wallets, token or NFT issuance, OTC trading, and crypto payment processing may be required to obtain a VASP license.
- The licensing process involves complying with anti-money laundering (AML) and know-your-customer (KYC) standards, maintaining robust cybersecurity measures, and implementing internal risk management frameworks.
- While the specifics of the licensing requirements for VASPs in Rwanda are yet to be disclosed, it's essential to consult the CMA's official publications or legal announcements for the most accurate and updated information.
