A recent report by Crypto Valley Venture Capital (CVVC) indicates that it is legal to trade cryptocurrencies in 6 countries on the continent, with the majority of the countries on the continent having no firm stance on the technology.
The 6 countries, which includes Kenya and South Africa, are said to have a ‘regulatory approach that inspires others to follow suit.’
The map below shows the legal status of cryptocurrencies across the continent, based on CV VC research, followed by a breakdown of the 6 legal countries:
Source: CVVC The African Blockchain Report 2021
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South Africa
The trading and holding of cryptocurrencies in South Africa is legal, as are cryptocurrency businesses. Until recently, no specific regulatory framework had been implemented.
The South African regulatory bodies were lenient in that they did not look to prematurely regulate cryptocurrencies before forging a better understanding of the field. Instead, the priority was to understand and provide the public with clarity early on. As a result, the Intergovernmental Fintech Working Group (IFWG) and the Crypto Assets Regulatory Working Group (CAR WG) were formed.
Since having been formed, the IFWG has, through the CAR WG, published a position paper on cryptocurrencies which brings them into South Africa’s regulatory purview in a ‘phased and structured manner.’
Mauritius
Although Mauritius considers virtual currencies an asset class for investments, they are not classified as legal tender in Mauritius.
Virtual asset service providers can obtain a license from the Financial Service Commission (FSC). In addition, Security Token Offerings (STOs) have a depicted framework to follow.
Mauritius has encouraged innovation by creating a Regulatory Sandbox and license, published in 2017. Regulators have worked alongside innovators to understand how new-age technologies could be integrated into industries and encourage financial inclusion.
As a result, cryptocurrencies and blockchain technologies have begun to foster themselves within the global financial hub of Mauritius.
Kenya
At present, the Kenyan government does not prohibit cryptocurrency usage, but, like most nations in Africa, it by no means encourages it.
In its 2015 notice, the CBK emphasized that cryptocurrencies are not regulated, they are not legal tender, and users are not afforded consumer protection when it comes to cryptocurrencies.
Then in late 2018, the Capital Markets Authority (CMA) issued a cautionary statement on ICOs, highlighting the risks and stating that it had not approved any such offerings by that point.
Today, some argue that the 2021 Capital Markets (investment-based crowdfunding) regulations draft have provided a framework for ICOs, although they are not mentioned outright.
Cryptocurrencies are legal for use in Kenya, though the CBK has the final say and uses broad discretion when examining specific cases involving cryptocurrencies. Similarly, the CMA exercises its broad discretion when determining whether cryptocurrencies are securities, though they are not securities by default.
Seychelles
In 2021, it was reported that the Financial Services Authority (FSA) and the Ministry of Finance in Seychelles are collaborating to determine whether to regulate or ban crypto businesses. However, there are no specific regulations for cryptocurrency or cryptocurrency businesses other than to comply with AML and CFT considerations.
The lack of a regulatory framework extends to running a cryptocurrency business, Decentralized Finance (DeFi), token sales, tokenized funds, and cryptocurrency exchanges. The Central Bank of Seychelles does not view cryptocurrencies as legal tender and, as such, does not regulate them.
Botswana
Botswana was listed as one of the country’s with a legal environment for cryptocurrencies in Africa.
In February 2022, Botswana passed a bill to regulate digital assets trading. The new rules seek that any company that offers cryptocurrency services, or anything related to digital tokens, should obtain a license from the Non-Bank Financial Institutions Regulatory Authority.
Eswatini
Eswatini is one of the countries with a legal environment for cryptocurrencies, according to the report by CVVC.
Nevertheless, the Central Bank of Eswatini (CBE) announced that it is researching cryptocurrency to learn how to ‘support innovation.’
Majozie Sithole, the Chief of the CBE, proclaimed that the entity intends to avoid stifling the technological development of cryptocurrency. Suggesting that cryptocurrencies will be relevant in the long term, Sithole stated that ‘it may not be wise to dismiss virtual currencies.’
