Rwanda’s National Bank and Capital Market Authority have proposed a draft law regulating virtual assets and service providers. This law aims to govern digital transactions while mitigating risks like money laundering. It prohibits using tokens to represent Rwandan currency, and emphasizes legal compliance for virtual asset service providers. Public consultations have commenced, reflecting a commitment to transparency in the regulatory process.
The National Bank of Rwanda (NBR) and the Capital Market Authority (CMA) have initiated a regulatory framework concerning virtual assets and service providers, reflecting a significant advancement in the management of digital financial transactions within the nation. This draft law categorizes virtual assets as digital representations of value that can be utilized for various financial activities such as trading, transferring, or making payments and investments. Notably, this definition encompasses assets associated with blockchain technology and includes those that are collateral-backed for stability.
The framework’s primary aim is to cultivate innovation while addressing potential risks connected to virtual assets, such as money laundering and terrorism financing, as highlighted by government officials. Carine Twiringiyimana, the Manager of Licensing and Approvals at CMA, pointed out that the Financial Action Task Force has raised alarms regarding the potential for virtual assets to facilitate money laundering.
The law was made public on March 6 for public consideration, encouraging transparency during the regulatory formation. Ms. Twiringiyimana elaborated that while cryptocurrencies are prevalent in Rwanda, the regulations also cover tokenization, which represents physical assets to create a comprehensive legal landscape. Importantly, the law stipulates that utilizing tokens to represent the Rwandan currency is strictly prohibited to prevent misuse.
Moreover, these regulations are set to deliver legal clarity and oversight for both digital currencies and digital replicas of tangible assets. With this regulatory framework, buyers can expect more secure transactions, as sellers will be legally bound to fulfill their commitments as promised to buyers. Article 8 of the draft law mandates that any legal entity wishing to engage in virtual asset services must obtain a license from the CMA.
Traders in the crypto market have expressed their support for the introduction of regulations. Gaspard Nsekambabaye, a crypto trader, emphasized that a regulatory framework could significantly benefit buyers, who often fall victim to scams. Many buyers currently transfer funds before receiving the purchased cryptocurrency, resulting in monetary losses that are arduous to trace.
Twizingimana also underscored the role of the Rwanda Investigation Bureau (RIB), which addresses financial crimes. Presently, due to the illegality of cryptocurrency trading in Rwanda, victims encounter challenges in seeking justice for fraudulent transactions. The anticipated regulation will clarify rules and foster transparent trading of virtual assets, assigning the CMA crucial responsibilities such as compliance oversight and licensing service providers.
In conclusion, Rwanda is proactively seeking to regulate virtual assets through a foundational draft law initiated by the NBR and CMA. This framework aims to balance innovation with legal oversight, addressing issues such as money laundering while protecting buyers. With public consultations underway, potential regulations will ultimately provide a structured environment for virtual financial transactions. There is optimism from traders about the clarity and transparency that regulations may usher into the virtual asset landscape.
Original Source: www.newtimes.co.rw
