Are Crypto Currencies Licensed in Ghana?

Bank of Ghana is one step closer to legalizing crypto currencies in GHANA- with their 2024 draft guidelines on digital assets-only 7 pages long

So although cryptocurrencies like bitcoin and tether are strictly speaking not legal in Ghana the final draft from bog on digital assets may well see the full legalization of being able to use and have platforms that trade crypto.

If legalalized soon, we will be a leader in the space, following countries such as

Countries Where Crypto is Fully Legal

  • El Salvador: Bitcoin is legal tender.
    • Law: Bitcoin Law (June 2021)
  • Central African Republic: Bitcoin is legal tender.
    • Law: Law on Cryptocurrencies and Other Digital Assets (April 2023)
  • Switzerland: Cryptocurrencies are recognized as property, and their use is generally permitted.
    • Regulation: Financial Market Infrastructure Act (FinMIA) and Anti-Money Laundering and Counter-Terrorism Financing Act (AMLA)
  • Singapore: Cryptocurrencies are legal, but there are regulations in place for businesses dealing in digital tokens.
    • Regulation: Payment Services Act and Securities and Futures Act

Countries Where Crypto is Semi-Legal

  • United States: Cryptocurrencies are legal, but there are regulations for exchanges, initial coin offerings (ICOs), and tax implications.
    • Regulation: Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), Internal Revenue Service (IRS)
  • United Kingdom: Cryptocurrencies are legal, but there are regulations for businesses offering crypto services.
    • Regulation: Financial Conduct Authority (FCA)
  • Germany: Cryptocurrencies are legal, but there are regulations for exchanges and ICOs.
    • Regulation: Financial Supervisory Authority (BaFin)

Countries Where Guidelines Have Been Issued Supporting Crypto Trading

  • Ghana: The Bank of Ghana has issued guidelines on virtual assets, encouraging innovation but also highlighting risks and regulatory expectations.
    • Guidelines: Guidelines on Virtual Assets (2024)
  • Malaysia: The Securities Commission has issued guidelines on digital assets, focusing on investor protection and market integrity.
    • Guidelines: Guidelines on Digital Assets (2019)
  • India: The Reserve Bank of India has issued guidelines on virtual currencies, expressing concerns about risks and cautioning against their use.
    • Guidelines: Circular on Virtual Currencies (2018)
  • This BOG Draft Guidelines on Digital Assets is basically
  • A proposed regulatory aimed to regulate and promote innovation in the digital assets space within ghana while safeguarding financial sector integrity

Although

  • Its a positive development in the process of regulating the digital asset sector in Ghana.
  • Nevertheless, it is important for Bank of Ghana to expands on the draft by first evaluating the potential drawbacks of the draft  and expanding it in such a way it ensures the guidelines truly promote innovation while effectively managing risks.

Areas of concern include

  • -the fact that stringent licensing requirements or capital adequacy norms can stifle innovation and discourage entry.
  • -Bank of Ghana also needs to ensure Virtual Asset Service Providers (VASPs) implement robust cybersecurity measures to address cyber threats.
  • -The guidelines should also be flexible enough to adapt to future technological advancements in the digital asset landscape.
    • Clear demarcation between the Bank of Ghana’s and SEC’s regulatory scope is crucial for avoiding confusion.
  • In terms of its impact on existing businesses, transition plans for existing VASPs to obtain authorization under the new framework need to be defined.

Altogether, the benefits of Ghana’s Draft Guidelines on Digital Assets include the fact that

  • the guidelines aim to provide much-needed clarity and certainty for businesses operating in the digital asset space. This is likely to attract more investment and innovation.
  • In terms of consumer protection, measures like customer due diligence and suspicious activity reporting can help protect investors from fraud and scams.
  • The draft guidelines help foster financial stability in Ghana because by regulating Virtual Asset Service Providers (VASPs) and transactions, the Bank of Ghana can mitigate risks associated with digital assets and maintain financial stability.
  • Furthermore, adherence to international standards like Financial Action Task Force (FATF) recommendations can facilitate international cooperation in combating financial crime.
  • Altogether,  the draft shows Ghana’s commitment to the exploring blockchain technology for financial services whilst improving efficiency and security.

 

Issues that Bank of Ghana should consider for a final draft include

  • further defining Digital Assets. As such, the scope of the regulations needs to be clear regarding the types of digital assets covered.
  • In terms of  Licensing Requirements, the specific criteria for Virtual Asset Service Providers (VASPs) to obtain authorization should be outlined.
  • AML/CFT Compliance is always important in documents like this therefore the specific measures Virtual Asset Service Providers (VASPs) need to implement to comply with anti-money laundering and counter-terrorism financing regulations need to be detailed.
  • This is only a draft therefore I expect the final version will include guidelines which address data privacy concerns related to user information collected by Virtual Asset Service Providers (VASPs).
  • I would also expect a final version of the Guidelines on Digital Assets to include clear tax regulations for digital asset transactions since this is crucial for promoting transparency and compliance.

Contact Clinton Consultancy today for all your Digital Assets needs.