The National Bank of Rwanda and Capital Market Authority have announced a draft regulatory framework aimed at overseeing virtual assets and their service providers. This initiative seeks to regulate digital financial transactions while preventing risks such as money laundering. Key aspects include the licensing of service providers, legal clarity for digital transactions, and heightened consumer protections against fraud. Public feedback is being solicited to ensure transparency in the regulatory process.
The National Bank of Rwanda (NBR) and the Capital Market Authority (CMA) have unveiled a draft regulatory framework designed to govern virtual assets and their service providers. This initiative marks a significant effort to regulate digital financial transactions within the country, recognizing virtual assets as crucial to the capital market. The proposed regulations classify these assets as digital representations of value that can be utilized for trading, payments, or investment purposes.
The regulatory framework identifies assets represented on blockchain or similar technologies, regardless of their cryptographic security, including those backed by collateral to ensure stable value. Its objectives include fostering innovation while addressing potential risks associated with virtual assets, particularly in relation to money laundering and terrorist financing prevention, as indicated by officials.
Carine Twiringiyimana, Manager of Licensing and Approvals at CMA, noted concerns raised by the Financial Action Task Force regarding the potential misuse of virtual assets for illicit activities. She stated, “A key concern raised by the Financial Action Task Force is that virtual assets can be used as a channel for money laundering. That’s why these regulations are being introduced to mitigate such risks while also providing clear guidance to the public and virtual asset service providers.”
The draft law, released to the public for feedback on March 6th, emphasizes transparency in the regulatory process. Twiringiyimana indicated that while cryptocurrency is prevalent in Rwanda, the new regulations also encompass tokenisation, which refers to the representation of physical assets. She underscored that using tokens to represent the Rwandan currency is strictly prohibited, aiming to prevent misuse or manipulation of virtual assets.
These regulations intend to establish legal clarity not only for digital currencies but also for the digital representation of tangible assets, promoting secure and regulated transactions. Furthermore, Twiringiyimana asserted that the new rules would protect buyers by ensuring that sellers are held accountable for their transactions, aligning with Article 8 of the draft law which mandates that any legal entity offering virtual asset services must obtain a license from the CMA.
Gaspard Nsekambabaye, a cryptocurrency trader, welcomed the introduction of the regulatory framework, asserting it would significantly protect buyers from scams commonly encountered in the crypto market. He elaborated that many buyers experience substantial financial losses due to sellers withholding purchased assets after payment, emphasizing the value of registering sellers to mitigate this issue.
Twiringiyimana encouraged individuals affected by fraudulent transactions to contact the Rwanda Investigation Bureau (RIB), which addresses financial crimes related to virtual asset trading. Currently, the RIB investigates financial crimes, including fraudulent crypto trading, but challenges arise for victims seeking justice in the absence of legal recognition for such trading. The proposed regulation is expected to provide clarity and encourage transparent trading practices in the sector, with the CMA taking on pivotal duties such as compliance oversight and licensing service providers.
The introduction of Rwanda’s draft regulatory framework for virtual assets represents a pivotal move towards ensuring legal clarity and oversight in digital transactions. By facilitating innovation while addressing risks such as money laundering, the regulations enhance consumer protection and foster trust in the emerging digital asset landscape. The establishment of a licensing system will help combat fraud, thereby promoting secure trading practices. Overall, this initiative positions Rwanda as a progressive player in the regulation of virtual assets.
Original Source: www.newtimes.co.rw
