Regulation of Cryptocurrency in the CEMAC Region: Key Updates and Implications

In May 2022, the financial regulator of Cameroon, Chad, the Central African Republic, Equatorial Guinea, Gabon, and Congo Brazzaville issued a significant prohibition affecting reporting entities, including Banks, Microfinance Institutions, and Payment Service Providers.

This prohibition disallows these entities from facilitating cryptocurrency transactions. The decision comes in the wake of the Central African Republic’s adoption of a cryptocurrency law.

The primary driver behind this decision is imperative to safeguard financial stability and protect customer deposits within the CEMAC region. Identified risks and existing regulatory provisions that do not authorize the holding and utilization of cryptocurrencies and crypto-assets by reporting institutions influenced this regulatory measure.

Key Takeaways from the Decision

1. Non-authorization of Cryptocurrency Holding: Reporting institutions and their technical partners involved in payment services are prohibited from subscribing to or holding cryptocurrencies or virtual currencies, whether for their own accounts or on behalf of third parties.
2. Restriction on Transactions: Reporting institutions and their technical partners engaged in payment services are forbidden from exchanging, converting, settling, or hedging transactions related to cryptocurrencies, or those linked to them, in foreign currency or francs CFA.
3. Prohibition on Valuation: Cryptocurrencies or virtual currencies are not to be treated as a means of valuing assets, liabilities, or off-balance sheet items for reporting institutions.
4. Exclusive Use of CFA Franc: Pursuant to the Chart of Accounts for credit institutions and microfinance institutions, the only acceptable currency for reporting institutions’ accounts is the CFA franc. Conventional currencies issued by central banks are exclusively used for foreign currency accounts.
5. Transaction Reporting: Reporting institutions are mandated to identify and track transactions associated with cryptocurrencies. They are required to provide detailed monthly reports on these transactions, including information about the ordering client, beneficiaries, amounts, transaction currency, consideration in cryptocurrency, and transaction purpose. These reports must be communicated to the Secretariat General of COBAC and the Central Bank.
6. Compliance Measures: Reporting institutions must implement robust measures, procedures, and internal controls within their information systems to enable real-time identification of cryptocurrency-related transactions. This is crucial for effectively implementing measures prescribed by regulatory and supervisory authorities, as well as the Central Bank.

Understanding these regulatory updates is paramount for reporting institutions operating within the CEMAC region. By adhering to these provisions, institutions can fulfill their obligations and contribute to maintaining financial stability.

Our legal experts provide comprehensive insights and guidance to help navigate the evolving landscape of cryptocurrency regulation.

For the latest updates and expert advice on cryptocurrency regulations in the CEMAC region, rely on our trusted legal expertise. Stay informed and compliant with the changing regulatory environment to ensure the long-term success of your financial institution.