Crypto regulation draft proposals released by Bank of Ghana
The Bank of Ghana (BoG) has announced a phased regulatory framework for cryptocurrencies, aiming to bring order to the rapidly growing digital asset market in the country. The proposed regulations, outlined in an August 2024 circular, focus on licensing and registering Virtual Asset Service Providers (VASPs).
The key details of the proposed framework include the mandatory registration of all VASPs, both local and foreign entities serving Ghanaian residents. This registration is a prerequisite before licensing, and while it does not imply operational approval, it is essential for future licensure and regulatory oversight.
The BoG is also expected to submit a Virtual Asset Providers Act to parliament by September 2025, which will formalize the regulation of digital assets, grant the BoG authority to supervise digital asset operations, and establish clear consumer protections, capital requirements, and anti-money laundering (AML) protocols.
Under the proposed regulations, crypto exchanges and wallet providers will be required to meet minimum capital thresholds, secure user funds, and implement robust AML and transparency measures to mitigate fraud and financial crime risks.
The objectives of the regulation include improving financial data collection and monitoring of capital flows, better managing the local currency—the cedi—which has shown high volatility, stabilizing monetary policy, and supporting macroeconomic stability.
The regulation seeks to integrate cryptocurrency into Ghana’s formal financial system, aiming to regulate a market that already has about 3 million users (approximately 17% of the adult population) and has seen about $3 billion in transactions between July 2023 and June 2024.
The BoG has adopted a phased approach, starting with registration and moving towards full regulation and supervision, aiming to reduce informal and potentially risky peer-to-peer crypto transactions by bringing VASPs into a regulated ecosystem.
The regulations will also cover anti-money laundering and combating the financing of terrorism (AML/CFT) guidelines for VASPs. In line with this, banks in Ghana would be permitted to offer financial services to licensed virtual assets service providers (VASPs).
The BoG's draft guideline is a response to the surge in digital asset use in the past three years. The regulations are part of a broader trend in Africa, with several countries pursuing different routes to crypto regulations, with a common motivation being the adherence to the Financial Action Task Force’s (FATF) Recommendation 15 related to crypto assets.
The BoG is drawing from the FATF's recommendations to limit digital asset risks, as evidenced by the fact that about 57% of the countries on the FATF's grey list are African. A FATF report found that 97% of African countries struggle with crypto compliance, highlighting the need for clear and effective regulations.
The Ghanaian Security and Exchange Commission (SEC) established a task force late last year to help it develop the capacity to regulate crypto assets. The BoG's draft guideline is a significant step towards achieving this goal.
The use of cryptocurrencies in Ghana has been banned since 2022. The new regulations, therefore, mark a significant shift in Ghana's approach to digital assets.
The regulations are expected to balance innovation with compliance, attract global fintech investment, protect consumers, and align Ghana with regional peers like Nigeria and South Africa, which have introduced similar crypto regulatory frameworks. South Africa has already put its crypto regulations into effect, having licensed over 130 crypto companies since the start of the year.
In summary, Ghana's August 2024 circular outlines a comprehensive, legally backed, and phased regulatory framework for cryptocurrency focused on licensing VASPs, implementing AML and consumer protection standards, and stabilizing the financial system and currency through formal oversight of a rapidly growing crypto market.
- The Bank of Ghana (BoG) aims to bring order to the digital asset market in Ghana by implementing a phased regulatory framework for cryptocurrencies, which includes licensing and registering Virtual Asset Service Providers (VASPs).
- The new regulations will require crypto exchanges and wallet providers to meet minimum capital thresholds, secure user funds, and implement robust anti-money laundering (AML) and transparency measures.
- The BoG is drawing from the Financial Action Task Force’s (FATF) recommendations to limit digital asset risks, as evidenced by the fact that the regulations will cover AML/CFT guidelines for VASPs.
- The Ghanaian Security and Exchange Commission (SEC) is working towards developing the capacity to regulate cryptocurrencies, and the BoG's draft guideline is a significant step towards achieving this goal.
- The new regulations are expected to attract global fintech investment, align Ghana with regional peers like Nigeria and South Africa, and protect consumers while balancing innovation with compliance.
