Rwanda Unveils Draft Law to Regulate Virtual Assets, Providing Clarity and Oversight

Rwanda has taken a significant step towards regulating digital asset transactions by unveiling a draft law governing virtual assets.

Addressing FATF Concerns

Rwandan regulators recently unveiled a draft law regulating virtual assets in the African country. The release of the draft, which identifies the Capital Markets Authority (CMA) as the regulatory authority overseeing the virtual assets industry, is seen as a key step toward Rwanda’s goal of regulating digital asset transactions.

According to a local report, Rwandan financial authorities are hopeful the framework will help foster innovation while mitigating associated risks. The report quotes Carine Twiringiyamana, the CMA’s manager of licensing and approvals, commending the release of the draft, which addresses concerns raised by the Financial Action Task Force (FATF).

“A key concern raised by the Financial Action Task Force is that virtual assets can be used as a channel for money laundering. That’s why these regulations are being introduced to mitigate such risks while also providing clear guidance to the public and virtual asset service providers,” Twiringiyamana said.

Released to the public on March 6, the Rwandan draft crypto regulations are said to provide legal clarity and oversight for digital representations of real-world assets. The unveiling of the draft comes just over two years after the National Bank of Rwanda (NBR) warned financial institutions against engaging in crypto-related transactions. At that time, the NBR suggested that this prohibition would be lifted once a regulatory framework was in place.

In addition to stipulating the role of the CMA regarding virtual assets, the draft clarifies that any business seeking to provide virtual asset services must apply for and secure approval from this regulator. Section 10 of the draft reiterates that virtual assets are not recognized as legal tender within Rwanda.

Similarly, using virtual assets as a means of payment for goods, services, debts, or any other financial obligation within Rwanda is prohibited. Section 11 of the draft also states that no legal entity or natural person is permitted to operate a crypto mining facility, virtual asset ATM, or a mixer or tumbler service.

Meanwhile, Twiringiyamana said individuals who are victims of crypto fraud can forward their complaints to the Rwanda Investigation Bureau (RIB), which is responsible for investigating financial crimes. However, once the proposed regulations are approved, the CMA will take on this and other responsibilities.