Sudan's Crypto Transactions Double Year-on-Year Amid Economic Crisis

Sudan is currently grappling with a severe economic crisis characterized by high inflation, a chronic lack of funds, and limited access to international banking systems. This economic turmoil has created an environment where informal cryptocurrency trading has flourished, despite the absence of specific virtual-asset legislation. The only relevant legal framework in Sudan is the Electronic Transactions Act of 2007, which addresses e-signatures and data privacy but predates the advent of Bitcoin. Additionally, the Central Bank of Sudan (CBOS) has issued anti-money-laundering (AML) circulars and occasional warnings about the risks associated with digital assets, emphasizing their susceptibility to fraud and volatility.

Historically, Sudan's engagement with digital currencies has evolved over the years. In 2018, diaspora groups began sending small transfers of Bitcoin and Litecoin, which were converted locally through hawala desks. In 2020, Sudan joined the UN-promoted Better Than Cash Alliance, which aimed to modernize government payments and indirectly boosted the digital-payments culture. In 2022, CBOS issued a nationwide warning about the legal uncertainties surrounding cryptocurrencies and the associated risks of crime and hacking. Despite these warnings, on-chain analytics indicate that the volume of crypto transactions in Sudan has doubled year-on-year, largely facilitated through offshore exchanges using VPNs.

The regulatory framework in Sudan is fragmented among four principal state actors. The Central Bank of Sudan (CBOS) issues circulars, can freeze bank accounts, and regulates mobile-money switches. The Digital Transformation Agency, part of the Cabinet, heads the national e-payments agenda and coordinates cash-to-digital migration initiatives. The Ministry of Telecom & Digital Economy deals with the licensing of ISPs and is drafting a new Cyber-Crime Act. The Chamber of the Ministry of Finance explains applicable income tax regulations to crypto gains and drafts new fiscal policies in a draft FinTech Bill. Regulations require banks and mobile-money operators to report suspicious transactions involving crypto-related transfers exceeding approximately USD 8,000. Crypto profits are taxed as miscellaneous income up to 15 percent, with a 2 percent withholding tax on high crypto-to-fiat swaps under consideration.

Sudan's crypto policies are nuanced. While peer-to-peer holding and trading of cryptocurrencies are not illegal, digital assets cannot be used to pay invoices; payments must be made in Sudanese pounds or approved foreign currency. Mining is explicitly prohibited, though the risk of power cuts and equipment loss keeps the industry small and underground. There are no licensed local exchanges; trading occurs in groups on Telegram and WhatsApp or at offshore exchanges like Binance P2P. The Ministry of Finance has considered stable-coin rails for lower-cost remittances and humanitarian cash transfers, but there are no active blockchain pilots.

Developers in Sudan prefer mobile-first products that can function during internet blackouts due to their low-bandwidth requirements. Examples include USSD-based wallets that enable merchants to receive USDT by feature phone and cash out through hawala brokers. Universities in Khartoum and Port Sudan are developing proof-of-concept land-registry and agri-traceability blockchains, preparing for a future regulatory sandbox.

Several challenges and issues are notable in Sudan's crypto landscape. The regulatory vacuum drives genuine start-ups into the shadows, diluting consumer protection. Currency instability means stablecoin demand does not bolster faith in the Sudanese pound. Rolling blackouts reduce mining efficiency, and unregulated OTC markets facilitate scams and ransom payments. U.S. and UN sanctions discourage international transactions and stablecoin issuance, exposing the system to instability. The digital divide means most rural Sudanese lack the internet connection and financial literacy required for crypto use.

Important regulatory trends and prospects include a draft FinTech Bill that would introduce the concept of Virtual-Asset Service Providers, require local hosting of data, and impose a 2 percent cybersecurity levy on cash-in to fiat. CBOS is considering an interim moratorium on advertising unlicensed crypto platforms until the bill is passed. Sudan is following the Pan-African Payment and Settlement System (PAPSS) rules, which could one day allow licensed stable-coin settlement of regional trade. Through roundtables organized by the Foreign Affairs Ministry on Diasporas, regulation-friendly remittance corridors are being sought to reduce fees by 10 percent to under 3 percent.

Sudan stands at a crossroads: the informal use of crypto is rapidly gaining speed, but the legal framework has not kept pace. A pragmatic licensing system could convert this grass-roots energy into a regulated remittance, e-commerce, and SME finance machine. Blanket prohibition would likely intensify the grey market and exacerbate the loss of control. The FinTech Bill is expected to be discussed in Parliament at the end of 2025, with specific regulations on CBOS licensing potentially emerging in 2026 upon the successful passing of the bill.