Rwanda proposes new laws governing digital currencies
Rwanda has announced the enforcement of a draft law to regulate virtual assets, marking a significant step towards legitimising the use of cryptocurrencies within the country. The new regulations, which became effective on March 3, place virtual assets under the regulatory purview of the Capital Markets Authority (CMA) and the National Bank of Rwanda (NBR).
The law mandates that cryptocurrencies are not admissible as legal tender in Rwanda. However, the authorities aim to regulate digital assets rather than eliminate them, as their use continues to grow within Rwanda's borders.
Operators of unlicensed Virtual Asset Service Providers (VASPs) in Rwanda risk fines up to 30 million Rwandan francs ($21,000) and up to five years in jail. To operate legally, VASPs are being asked to apply for licenses from the CMA.
The draft regulations include guidelines for the issuance of Initial Coin Offerings, tokenized real-world assets, and stablecoins. It also enforces the travel rule among licensed VASPs and regulators, requiring exchanges to collect and share information on individuals transacting with cryptocurrencies.
The CMA's licensing and approvals manager, Carine Twiringiyimana, stated that the law was passed due to the Financial Action Task Force's warning on the money laundering risks that crypto poses. In the past, the Rwandan Investigative Bureau has arrested and prosecuted individuals for illegal currency sales, money laundering, and fraud.
The new regulations also require VASPs to comply with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) regulations, implement robust customer due diligence (KYC), maintain cybersecurity and risk management frameworks, and submit regular reports on transactions. These requirements align with those recently introduced in nearby countries like Kenya.
The CMA and the National Bank of Rwanda are seeking public comments on the new law. A virtual consultation meeting is scheduled to take place on March 17, and the public is invited to submit comments on the new law before March 14. For precise and up-to-date regulatory details specific to Rwanda, consulting the official releases from Rwanda's CMA and NBR websites or official gazettes would be necessary.
It's worth noting that no information provided suggests that the cryptocurrency ban remains in effect in Rwanda. Last year, the governor of the National Bank of Rwanda, John Rwangombwa, announced that the bank was working on crypto regulations that could come into effect as early as the first quarter of the year.
As Rwanda advances in virtual asset regulations, it joins a growing number of countries that are seeking to strike a balance between innovation and financial security.
[1] Kenya's Virtual Asset Service Providers (VASPs) Regulations [2] Understanding Kenya's New Crypto Regulations
- The new digital asset regulations in Rwanda place crypto businesses under the supervision of both the Capital Markets Authority (CMA) and the National Bank of Rwanda (NBR).
- Operators of unlicensed VASPs in Rwanda may face fines of up to 30 million Rwandan francs ($21,000) and imprisonment for up to five years, emphasizing the importance of obtaining a license from the CMA to run a legal crypto business.
- The draft regulations in Rwanda cover guidelines for Initial Coin Offerings, tokenized real-world assets, and stablecoins, aiming to regulate digital assets while managing the potential risks of money laundering and terrorism financing.
- As Rwanda evolves its virtual asset regulations, it follows the lead of nearby countries like Kenya, which have recently introduced new crypto regulations aimed at balancing innovation and financial security.
