REGULATION | A Look at the State of Crypto Regulation Across Africa in 2024

This article examines the current state of crypto regulation in Africa, highlighting the countries that have active legal regimes allowing crypto activity at the end of 2024.

kodzilla··9 min read

Cryptocurrency adoption in Africa has experienced remarkable growth in recent years, driven by a combination of unique economic challenges and technological innovation.

The continent has become a hotspot for crypto activity, with countries like Nigeria, Kenya, and South Africa leading the way in trading volumes, peer-to-peer transactions, and blockchain-based solutions. For many Africans, cryptocurrency offers a lifeline in navigating issues such as inflation, limited access to traditional banking, and the high cost of cross-border remittances.

The rise of digital currencies has sparked debates on balancing innovation with consumer protection, addressing financial crimes, and fostering economic growth.

 

This article examines the current state of crypto regulation in Africa, highlighting the countries that have active legal regimes allowing crypto activity at the end of 2024.

 

 

1.) South Africa

South Africa has established itself as a frontrunner in cryptocurrency regulation on the African continent.

In October 2022, the Financial Sector Conduct Authority (FSCA) classified crypto assets as ‘financial products’ under the Financial Advisory and Intermediary Services Act, requiring Crypto Asset Service Providers (CASPs) to obtain licenses.


By late 2024, the FSCA had approved 248 CASP licenses, following rigorous evaluations of applicants’ security measures, governance, and anti-money laundering (AML) capabilities.


Further strengthening oversight, the country’s Financial Intelligence Centre Act was amended to include CASPs as accountable institutions, mandating compliance with AML regulations, customer due diligence, and suspicious transaction reporting. This proactive approach has legitimized the crypto industry, encouraging traditional financial institutions to engage with digital assets and creating a secure, integrated financial ecosystem.

South Africa’s comprehensive regulatory framework has served as a benchmark for other African nations, showcasing how clear policies can promote innovation while safeguarding financial stability.

 

 

2.) Mauritius

Mauritius has established itself as a forward-thinking jurisdiction in the regulation of virtual assets and related services. The enactment of the Virtual Asset and Initial Token Offering Services (VAITOS) Act on February 7 2022 marked a significant milestone in the country’s efforts to provide a comprehensive regulatory framework for the virtual asset industry.

 

Key Features of the VAITOS Act

  • Scope of Regulation: The VAITOS Act empowers the Financial Services Commission (FSC) to regulate and supervise Virtual Asset Service Providers (VASPs) and issuers of Initial Token Offerings (ITOs) operating within Mauritius
  • Licensing Requirements: Entities intending to provide services such as digital asset custody, operation of virtual asset platforms, or other related activities must obtain the appropriate licenses from the FSC
  • Anti-Money Laundering (AML) Compliance: The Act mandates stringent AML and counter-terrorism financing measures, ensuring that VASPs adhere to international standards to prevent illicit activities
  • Distinction Between Virtual Assets and Security Tokens: Under Mauritian law, security tokens are differentiated from virtual assets and are regulated under the Securities Act 2005, rather than the VAITOS Act. A security token refers to securities, as defined under the Securities Act 2005, represented in digital format

Mauritius does not impose capital gains tax; therefore, gains from the disposal of crypto assets are generally exempt from taxation. However, if such gains are considered as trading profits, they may be subject to income tax. The classification depends on the nature of the transactions and the intent behind holding the assets.

 

3.) Namibia

On July 25 2023, Namibia enacted the Virtual Assets Act 2023, signaling a pivotal shift towards the regulation of virtual assets and service providers.


The Act, which was the 3rd of its kind in Africa, mandated that Virtual Asset Service Providers (VASPs) obtain licenses to operate within Namibia, ensuring compliance with established standards.

The Act provisioned a designated Regulatory Authority tasked with overseeing and supervising VASPs and related activities, aiming to ensure consumer protection and the integrity of the financial system.

Previously in 2017, the Bank of Namibia issued a position paper declaring that virtual currencies were not recognized as legal tender and prohibiting their use for payment of goods and services. Additionally, the establishment of cryptocurrency exchanges was deemed illegal under the Exchange Control Regulations of 1961.

 

 

4.) Seychelles

Seychelles is one of the leading countries for crypto entrepreneurs with blockchain startups in the country having received the most venture capital in 2023.


In August 2024, the country’s National Assembly approved the Virtual Asset Service Providers (VASP) Bill aiming to oversee and structure activities related to virtual assets within the country.


Key Provisions of the VASP Bill

  • Licensing Requirements: Entities offering virtual asset services must obtain a license from the Financial Services Authority (FSA). Applicants are required to establish a substantial presence in Seychelles, including appointing a resident director and maintaining a local office with qualified personnel
  • Scope of Regulation: The bill encompasses various services, including wallet provision, virtual asset exchanges, brokerage services, and virtual asset investment management. It also mandates the registration of promoters involved in initial coin offerings (ICOs) and non-fungible tokens (NFTs)
  • Anti-Money Laundering (AML) Measures: The legislation introduces stringent AML and counter-terrorism financing protocols, aligning with international standards set by the Financial Action Task Force (FATF). This includes comprehensive compliance inspections and the authority to take enforcement actions against non-compliant entities
  • Consumer Protection and Education: A significant focus is placed on safeguarding consumers through education about potential risks associated with virtual assets and implementing measures to prevent fraud and misuse

The VASP Bill stipulates that existing virtual asset service providers must apply for the necessary licenses by December 31 2024. During the interim period, these entities are permitted to continue operations until the FSA reaches a decision regarding their applications.

 

5.) Nigeria

Nigeria, one of Africa’s largest cryptocurrency markets, has experienced a dynamic and evolving regulatory environment in recent years.

In February 2021, the Central Bank of Nigeria (CBN) prohibited financial institutions from facilitating cryptocurrency transactions, effectively restricting the integration of digital assets into the traditional banking system.


The CBN lifted its ban on digital currency transactions in December 2023, allowing financial institutions to engage with cryptocurrency-related activities.


Meanwhile, the Securities and Exchange Commission (SEC) has sought to establish a regulatory framework for digital assets:

  • Digital Assets Rules: In 2022, the SEC introduced the Digital Assets Rules, aiming to regulate virtual assets and service providers. However, these rules were not fully operationalized, partly due to the CBN’s restrictive policies
  • Accelerated Regulatory Incubation Program: In 2024, the SEC granted ‘Approval-in-Principle’ to two digital asset exchanges under this program, signaling a move towards a more structured regulatory approach

The SEC granted ‘Approval-in-Principle’ to two digital asset exchanges under this program:

  • Busha Digital Limited: Operates a digital exchange facilitating the buying and selling of crypto assets with fiat currency, enabling individuals and businesses in Nigeria and other developing economies to access basic digital asset investment services
  • Quidax Technologies Limited: Runs a cryptocurrency trading platform leveraging blockchain technology to list and trade already issued crypto tokens, providing both web and mobile access for ease of use


The SEC admitted additional firms to test their models and technology under a separate regime dubbed Regulatory Incubation (RI) Program including:

  • Trovotech Ltd: Facilitates the creation of digital tokens for trading tokenized real-world illiquid assets, such as housing, agriculture, and infrastructure, as securities
  • Wrapped CBDC Ltd: Plans to introduce a Nigerian-issued stablecoin, cNGN, pegged 1:1 to the Nigerian naira, aiming to facilitate local and cross-border crypto transactions
  • HousingExchange.NG Ltd: Develops a platform for tokenizing real estate assets, enabling fractional ownership and investment in the property market
  • Dream City Capital: Focuses on digital asset management and investment services within the cryptocurrency space
  • Blockvault Custodian Ltd: Provides secure custody solutions for digital assets, ensuring the safekeeping of cryptocurrencies for investors

 

 

6.) Botswana

In early 2022, the Parliament of Botswana unanimously approved the Virtual Assets Bill, aiming to regulate cryptocurrency activities within the country.


The Non-Bank Financial Institutions Regulatory Authority (NBFIRA) is mandated with the oversight and supervision of virtual asset service providers in Botswana. NBFIRA has outlined that the Virtual Assets Act applies to any person conducting virtual asset business, regardless of their physical location.


In conclusion, while several African countries, including South Africa, Seychelles, Mauritius, and Nigeria, have already established regulatory frameworks for virtual assets, many others are still in the process of finalizing their regulations.

Countries like Kenya and Ghana are actively working towards formalizing their regulatory approaches, indicating a promising direction for the future of cryptocurrency in the region.


Meanwhile, nations such as Zimbabwe and Malawi are still in the exploratory phase, considering the potential benefits and risks of integrating cryptocurrencies into their financial systems.


As the regulatory landscape continues to evolve, it is clear that Africa is becoming increasingly aware of the need for clear guidelines to foster innovation while ensuring consumer protection and financial stability.

 

 

 

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