Bank of Ghana begins steps to regulate cryptocurrency; draft guidelines unveiled

The Bank of Ghana has unveiled new draft regulations aimed at establishing a comprehensive framework for the country's digital asset sector.

These proposed guidelines, disclosed on August 16, 2024, seek to promote financial inclusion, ensure economic stability, and safeguard consumers within the burgeoning cryptocurrency market.

The introduction of these regulations follows an in-depth internal review of cryptocurrencies such as Bitcoin and Tether (USDT). This move addresses the rising interest in digital assets among Ghana’s increasingly tech-savvy population. Although cryptocurrency transactions currently constitute a small fraction of overall financial activities, their growing use for purposes like cross-border payments, crowdfunding, and remittances has highlighted the need for clearer regulatory measures.

The draft regulations place a significant emphasis on regulating cryptocurrency exchanges and Virtual Asset Service Providers (VASPs). Under the new laws, these entities will be required to register with either the Bank of Ghana or the Securities and Exchange Commission (SEC), based on their specific services. Registered exchanges will have to comply with anti-money laundering (AML) and counter-terrorism financing (CFT) regulations, including adhering to the FATF’s Travel Rule, and report any suspicious activities to the Financial Intelligence Centre (FIC).

VASPs will need to prove they have robust internal controls, effective risk management practices, and meet certain capital requirements to operate legally. Additionally, commercial banks and financial institutions will be restricted from engaging with unregistered VASPs, and from directly handling virtual assets or providing custody services.

The Bank of Ghana plans to implement a sandbox testing process with selected VASPs before finalising the regulations. This testing phase is intended to help the central bank identify and address potential issues, allowing for refinement of the rules before broader rollout. The timeline for the regulations to come into effect has not been announced, but the public and industry stakeholders are invited to provide feedback on the draft guidelines by August 31, 2024.

Beyond cryptocurrency regulation, the Bank of Ghana is also progressing with its central bank digital currency (CBDC) initiative, known as the eCedi. Launched in 2021, the eCedi project includes plans for offline functionality and underscores Ghana's efforts to embrace digital financial innovation. Additionally, Ghana has recently made strides in blockchain technology, as evidenced by Ghana Post’s introduction of the nation’s first Non-fungible Token (NFT) stamp to celebrate the 25th anniversary of Otumfuo Osei Tutu II, the king of the Ashanti people.

The Bank of Ghana’s draft regulations mark a pivotal development in integrating digital assets into the financial system while ensuring appropriate protections for consumers and maintaining economic stability. As the digital finance landscape continues to evolve globally, Ghana is positioning itself as a proactive participant in shaping the future of this sector.

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