Rwanda Introduces Draft Law to Regulate Virtual Assets

To improve the security of digital assets transactions and avoid any potential risks in the crypto market, Rwanda took a significant step towards regulating virtual assets through a “Draft Law”. Capital Markets Authority (CMA) is the main regulatory body keeping an eye on the digital assets industry. 

According to local reports, financial authorities in Rwanda believe this framework will help encourage innovation while ensuring digital assets are not misused. Carine Twiringiyamana, the CMA’s manager of licensing and approvals, acknowledged the importance of the draft, stating that it specifically tackles concerns raised by the Financial Action Task Force (FATF).

Addressing FATF Concerns

The FATA raised concerns about how digital transactions became a space for money laundering and virtual assets a tool for illegal payments in business. To avoid future security breaches and abnormal activities, new regulations are necessary in the digital exchange industry. 

Twiringiyamana emphasized that these regulations aim to prevent digital assets from being used for illegal purposes. The draft law ensures that businesses involved in virtual asset services must seek approval from the CMA before operating. Released to the public on March 6, the draft law is expected to provide much-needed legal clarity regarding digital representations of real-world assets.

Restrictions on Virtual Assets in Rwanda

The publication of the draft regulations follows a previous directive by the National Bank of Rwanda (NBR), where the NBR warned financial institutions against dealing in cryptocurrencies. The NBR had indicated that the ban would remain in place until there was a proper regulatory framework.

The law, as proposed, categorically states that virtual assets are not legal tender in Rwanda. It categorically prohibits their use as a payment method for goods, services, debt, or other financial obligations in Rwanda.

In addition, Section 11 of the bill also provides additional prohibitions by stopping the establishment of cryptocurrency mining facilities, virtual asset automatic teller machines, and mixers and tumblers, typically associated with concealing the origin of cryptocurrency transactions.

Handling Crypto Fraud Cases

To address the matter of fraud, Twiringiyamana stated that the victims of cryptocurrency scams can file a case with the Rwanda Investigation Bureau (RIB), the organization tasked with the investigation of economic crimes. The Capital Markets Authority (CMA) will take on the mandate after the new laws are in full effect and will be in charge of all the issues regarding digital assets in Rwanda.

With this draft regulation, Rwanda is pioneering the way to create a secure and well-structured platform for virtual assets while at the same time conforming to global financial standards. This framework is poised to achieve a harmonious balance between innovation and security, enabling the efficient use of digital assets across the country.