Rwanda presents draft laws governing digital currencies
In a significant move towards financial regulation, the Rwandan government has announced the enforcement of a draft law to regulate virtual assets. The new regulations, effective from March 3, place virtual assets and Virtual Asset Service Providers (VASPs) under the regulatory purview of the Capital Markets Authority (CMA) and the National Bank of Rwanda (NBR).
The draft regulations come after a finance executive was arrested and prosecuted for illegal currency sales, money laundering, and fraud in 2023. The authorities have acknowledged that the aim is not to eliminate digital assets, but to regulate them, as their use continues to grow within Rwanda's borders.
Under the new regulations, VASPs are now required to apply for licenses from the CMA to operate legally, or risk prosecution. Operators of unlicensed VASPs face fines up to 30 million Rwandan francs ($21,000) and up to five years in jail.
The draft regulations also prohibit the use of cryptocurrencies as legal tender. Crypto mining activities, crypto ATMs, and VASPs providing mixing services are banned in Rwanda. The travel rule is enforced among licensed VASPs and regulators, requiring exchanges to collect and share information on individuals that transact with cryptocurrencies.
The specific requirements for obtaining a license from the CMA have not been detailed in the announced regulations. However, based on common international standards, VASP regulatory frameworks often include the incorporation of entities within the jurisdiction, submission of corporate documents, business plans, AML/KYC policies, director identity and references, proof of minimum capital, and evidence of technical expertise.
The Rwanda government has called for public comments on the new law to be submitted before March 14. A virtual consultation meeting is scheduled to take place on March 17. The impact of these new regulations on the existing virtual asset market in Rwanda is yet to be seen.
For precise information about Rwanda's draft law on VASPs, it is necessary to consult the official government publication or draft text of Rwanda’s VASP regulation, communications from Rwanda’s financial regulatory authority or central bank, or legal advisory services specializing in East African digital asset laws.
- The new regulations in Rwanda will place digital assets and Virtual Asset Service Providers (VASPs) under the regulatory jurisdiction of the Capital Markets Authority (CMA) and the National Bank of Rwanda (NBR).
- To operate legally, VASPs must now apply for licenses from the CMA, with operators of unlicensed VASPs facing fines and imprisonment.
- These new regulations include a ban on the use of cryptocurrencies as legal tender, prohibiting crypto mining activities, crypto ATMs, and mixing services in Rwanda.
- For VASPs, the travel rule is enforced, requiring licensed exchanges to collect and share information on individuals that transact with cryptocurrencies.
