The National Bank of Rwanda (BNR) and the Capital Market Authority (CMA) have introduced a draft regulatory framework for virtual assets and virtual asset service providers, a step towards governing digital financial transactions in the country. Virtual assets, also known as digital assets are increasingly seen as key in the capital market. The proposed law defines them as digital representations of value that can be traded, transferred, or used for payments and investments. ALSO READ: Rwanda central bank considering cryptocurrency regulation The definition extends to assets represented on blockchain or similar technologies, whether cryptographically secured or not, and includes those backed by collateral to maintain a stable value. The framework aims to foster innovation while mitigating potential risks associated with virtual assets, prevent and mitigate money laundering and terrorist financing risks linked to virtual assets, according to officials. ALSO READ: Why central bank maintains caution on crypto currencies Carine Twiringiyimana, Manager of Licensing and Approvals at CMA, said that one of the primary issues raised by the Financial Action Task Force, the global money laundering and terrorist financing watchdog, is the potential misuse of virtual assets for money laundering. “A key concern raised by the Financial Action Task Force is that virtual assets can be used as a channel for money laundering. That’s why these regulations are being introduced to mitigate such risks while also providing clear guidance to the public and virtual asset service providers,” she explained. The draft law was released to the public on Thursday, March 6, to gauge public opinion and ensure transparency in the regulatory process. ALSO READ: Central Bank warns against crypto-assets related investments Twiringiyimana also said that cryptocurrency is one of the most common virtual assets in Rwanda, but tokenisation, which represents physical assets, is also part of the new regulations aimed at creating a comprehensive legal framework. “One main thing the law highlights is that, the use of tokens to represent the Rwandan currency is strictly prohibited, as part of the effort to ensure that virtual assets are not misused or manipulated,” she said. In essence, the regulations aim to provide legal clarity and oversight not just for digital currencies but also for digital representations of real-world assets, allowing for secure, transparent, and regulated transactions in both areas. Twiringiyimana also stated that with the introduction of the regulations, buyers will no longer have to endure unregulated transactions. Sellers will now be legally obligated to deliver exactly what they have promised to the buyer. According to Article 8 of the draft law, any legal entity wishing to conduct business of virtual asset services will apply for a license to the regulatory authority (CMA) and the authority will determine requirements. Traders welcome regulation Gaspard Nsekambabaye, who trades crypto, highlighted that the introduction of a regulatory framework could greatly help buyers who are often scammed into crypto trading. According to him, buyers in the crypto market often send money to the bitcoin seller before receiving the assets they purchased. In many cases, buyers transfer funds from their bank accounts or mobile money to the seller, only for the seller to withhold the crypto. “This leaves buyers, especially newcomers, losing significant amounts of money that are difficult to trace or report. I believe the registration of sellers will be a valuable step in addressing this issue,” he noted. Twiziyimana emphasised that individuals who are already affected by fraudulent virtual asset transactions can meanwhile seek assistance from the Rwanda Investigation Bureau (RIB), which is responsible for handling financial crimes. Currently, Rwanda Investigation Bureau (RIB) is responsible for investigating financial crimes, including those related to virtual assets trading such as cryptos. But since trading of cryptos is not legal in Rwanda, victims usually find themselves struggling to get justice since investigation tends to be complex. When the new regulation is approved, the rules will be clear, enabling open trading of virtual assets and bringing transparency among traders. “CMA will now take on key responsibilities, including ensuring compliance, licensing service providers, and overseeing virtual asset operations,” Twiringiyimana said.
