Rwanda Approves Cryptocurrency Regulation Law

Rwanda’s Chamber of Deputies has approved a new law regulating the trade of digital assets such as Bitcoin, which had previously operated without a clear legal framework.

Purpose of the Law

The legislation aims to reduce risks linked to money laundering and terrorism financing while protecting consumers and investors from fraud and misleading profit promises.

During its review, the parliamentary Committee on Trade and Economy found that Rwanda Investigation Bureau had recorded 35 cases related to fraud in cryptocurrency activities.

Previous Cases

Several individuals previously reported losses after being promised high returns from online investments that did not materialize.

A notable case involved a ruling by the Gasabo High Court, which sentenced Manzi Sezisoni Davis to seven years in prison and imposed a fine of $7.81 million for offenses including fraud and money laundering.

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Regulation and Oversight

The Government of Rwanda stated that the law establishes general principles, while detailed requirements will be defined through implementing regulations.

Capital Market Authority Rwanda has been designated as the regulatory body responsible for overseeing cryptocurrency operations, issuing licenses, and supervising service providers.

Participants entering the sector will be required to meet minimum capital requirements set by regulations.

Categories of Digital Assets

The law defines three main categories: stable digital assets backed by reserves, tokenized assets using blockchain technology, and unbacked digital assets.

Market Overview

Globally, over one billion people use digital assets, with more than 70 million actively trading them.

In East Africa, Kenya has over four million users, Uganda two million, Tanzania 1.5 million, and Rwanda more than 350,000 users.

A report by Chainalysis indicated Rwanda ranked 69th globally in 2021 but dropped to 142nd after National Bank of Rwanda advised caution in 2023.

Risks and Safeguards

The law highlights risks such as anonymous transactions, illegal cross-border transfers, and regulatory gaps across jurisdictions.

It also notes that some service providers lack adequate measures to prevent financial crimes.

To address these concerns, the law requires transparency, data protection, and security measures to strengthen trust in the market.

Penalties

Strict penalties are introduced for unauthorized operations.

Individuals may face fines between 30 million and 50 million Rwandan francs and imprisonment ranging from three to five years.

Companies may be fined between 50 million and 100 million Rwandan francs.

Unauthorized promotion of cryptocurrency activities may also result in fines and imprisonment.

Additional measures include warnings, temporary suspension, or permanent revocation of licenses for non-compliance.