Africa (Commonwealth Union) _ The National Bank of Rwanda (NBR) and the Capital Market Authority (CMA) have unveiled a draft regulatory framework for virtual assets and virtual asset service providers, marking a significant step towards overseeing digital financial transactions in the country.
Virtual assets, commonly known as digital assets, are becoming increasingly vital in the capital market. The proposed law defines them as digital representations of value that can be traded, transferred, or used for payments and investments. This definition extends to blockchain-based assets, whether cryptographically secured or not, including those backed by collateral to maintain stable value.
Balancing Innovation and Security
The framework is designed to encourage financial innovation while addressing associated risks such as money laundering and terrorist financing. The Financial Action Task Force (FATF) highlights the potential misuse of virtual assets for illicit activities as one of the main concerns, according to Carine Twiringiyimana, Manager of Licensing and Approvals at CMA.
“A key concern raised by the FATF is that virtual assets can be exploited for money laundering. These regulations are intended to mitigate such risks while also offering clear guidance to the public and virtual asset service providers,” she explained.
The draft law, released on March 6, seeks public input to ensure transparency and alignment with stakeholders’ interests.
Prohibited Use and Regulatory Oversight
While the framework acknowledges the growing presence of cryptocurrencies in Rwanda, it also emphasizes tokenization—the process of representing physical assets digitally. However, strict provisions prohibit the use of tokens to represent the Rwandan currency to prevent misuse and manipulation.
With these regulations, buyers will gain increased protection against fraudulent transactions, as sellers will be legally obligated to deliver assets as promised. Article 8 of the draft law mandates that any legal entity wishing to offer virtual asset services must obtain a license from the CMA, which will set forth the necessary compliance requirements.
Industry reactions and their impact on traders
Cryptocurrency traders in Rwanda have welcomed the move, citing the frequent scams that have plagued the industry due to a lack of oversight. Gaspard Nsekambabaye, a crypto trader, noted that buyers often send payments before receiving assets, leaving them vulnerable to fraud.
“Many buyers, especially newcomers, lose significant amounts of money because sellers withhold the crypto after receiving payments. The registration of sellers will help address this issue,” he said.
Currently, the Rwanda Investigation Bureau (RIB) handles financial crimes, including those related to virtual assets. However, since crypto trading remains largely unregulated, victims struggle to obtain justice due to the complexities involved. Once the new regulations are approved, CMA will take on key responsibilities such as licensing service providers and ensuring compliance, paving the way for secure and transparent digital transactions in Rwanda.
