Rwanda Introduces Draft Law to Regulate Virtual Assets, Enhance Security

Rwanda has made a significant move towards regulating virtual assets by introducing a draft law aimed at enhancing the security of digital asset transactions and mitigating potential risks in the crypto market. The Capital Markets Authority (CMA) is the primary regulatory body overseeing the digital assets industry in the country.

Financial authorities in Rwanda believe that this regulatory framework will foster innovation while ensuring that digital assets are not misused. Carine Twiringiyamana, the CMA’s manager of licensing and approvals, highlighted the importance of the draft law, noting that it specifically addresses concerns raised by the Financial Action Task Force (FATF). The FATF has expressed worries about digital transactions being used for money laundering and illegal payments, making new regulations necessary to prevent security breaches and abnormal activities in the digital exchange industry.

Twiringiyamana emphasized that the regulations are designed to prevent digital assets from being used for illegal purposes. The draft law mandates that businesses involved in virtual asset services must seek approval from the CMA before operating. Released to the public on March 6, the draft law aims to provide much-needed legal clarity regarding digital representations of real-world assets.

The publication of the draft regulations follows a previous directive by the National Bank of Rwanda (NBR), which warned financial institutions against dealing in cryptocurrencies. The NBR had indicated that the ban would remain in place until a proper regulatory framework was established. The proposed law clearly states that virtual assets are not legal tender in Rwanda and prohibits their use as a payment method for goods, services, debt, or other financial obligations.

Additionally, Section 11 of the bill includes further prohibitions, such as the establishment of cryptocurrency mining facilities, virtual asset automatic teller machines, and mixers and tumblers, which are often associated with concealing the origin of cryptocurrency transactions. These measures are intended to enhance the security and transparency of digital asset transactions in the country.

To address the issue of fraud, Twiringiyamana stated that victims of cryptocurrency scams can file a case with the Rwanda Investigation Bureau (RIB), the organization tasked with investigating economic crimes. Once the new laws are fully implemented, the CMA will take on the mandate of handling all issues related to digital assets in Rwanda. This regulatory framework is poised to create a secure and well-structured platform for virtual assets, aligning with global financial