The National Bank of Rwanda has directed all the nations’ banks to desist from “any crypto-related activities until a regulatory framework has been put in place. Rwanda joins Zimbabwe and Nigeria on the list of African countries to ban banks from processing crypto transactions.
Soraya Hakuziyaremye, the acting governor of the NBR, justified the organization’s move in a letter addressed to managing directors and CEOs of financial services providers on January 31st.
She explained the unregulated status of most crypto assets leaves users without the “guarantees and safeguards associated with regulated financial services.” The NRB’s letter cites how crypto investors elsewhere have been duped by scammers like Ruju Ignatova of Onecoin and Gerald Cotten of Quadriga crypto exchange.
The IMF reported in November that only one-quarter of countries in sub-Saharan Africa formally regulate crypto. Two-thirds have implemented some restrictions, and six countries—Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of Congo—have banned crypto.
Zimbabwe has ordered all banks to stop processing transactions, and Liberia directed a local crypto startup to cease operations (implicit bans).
Many African countries have banned crypto-related transactions in the past. According to BusinessCompiler, as of the end of 2021, 23 African countries have placed bans on the use and trade of cryptocurrencies within their economies. It revealed that four African countries placed an absolute ban on cryptocurrency, while 19 other countries placed implicit restrictions on digital assets.
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Rwanda’s Central Bank seeks protection for users
In 2018, Rwanda’s central bank warned Rwandans about their involvement in crypto transactions. Hakuziyaremye acknowledged that Rwandan residents have continued to trade digital assets like Bitcoin. As reported in the letter, available data revealed that “more than three million U.S. dollars were traded on the Rwandan market since January 2020.”
NBR seeks to protect users against the crypto ecosystem’s volatility. “For example, Binance, whose presence was noticed in Rwanda, is under investigation in the United States of America over money laundering allegations. The Financial Conduct Authority (FCA) has banned the same company due to “weak consumer and investor protection mechanisms,” her letter reads.
Rwanda’s apex Bank believes that their crypto users are exposed to a market without “the guarantees and safeguards associated with regulated financial services.” Thus, to protect them against a possible downfall, restrictions have been placed on financial institutions, preventing them from active participation in crypto-related transactions.
“Although crypto asset activities are still limited and therefore do not pose substantial risks to the financial and monetary systems of Rwanda, the NBR is concerned about the involvement of financial institutions in crypto activities.”
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