Understanding digital money in the age of virtual assets

As the government implements a new law regulating virtual asset businesses, public interest is growing in the broader world of digital money and how different forms of it work. From mobile money and online banking to cryptocurrencies and emerging central bank digital currencies (CBDCs), digital financial services are becoming an increasingly important part of everyday life. Yet many people still struggle to distinguish between digital payments, digital currencies, and virtual assets. The publication of the 2026 Law on Virtual Asset Business in the Official Gazette on May 28 has brought these distinctions into sharper focus. The law establishes a framework for regulating businesses that deal in virtual assets, a rapidly growing segment of the digital finance ecosystem. A virtual asset is a digital representation of value that can be traded, transferred, or used for investment purposes through electronic networks. Existing only in digital form, virtual assets include cryptocurrencies such as Bitcoin, digital tokens, and other blockchain-based assets. ALSO READ: What are virtual assets and how do they work? However, virtual assets represent only one category within the broader digital money landscape. Mobile money balances and funds held in bank accounts are also digital, but they remain claims on existing national currencies and operate within regulated payment systems. Virtual assets, by contrast, are often created and exchanged on decentralised networks and may not be issued or guaranteed by a central bank or government. As governments, banks, telecom companies, and fintech firms continue driving the shift toward cashless economies, understanding these differences is becoming increasingly important for consumers. ALSO READ: Virtual assets law expected to boost digital finance Across Africa, platforms such as MoMo and Airtel Money have transformed access to financial services, enabling millions of people to send, receive, and store money using mobile phones, often without a traditional bank account. For many small business owners, digital payments have become a routine part of daily commerce. Claudine Uwase, who runs a small shop in Kigali, said mobile money has transformed how she handles transactions. “Most customers pay using phones now. In the past, people always needed cash, and transactions could be delayed while looking for change. Today, payments happen instantly. Some days I realise I barely handled any physical money at all.” One of the biggest misconceptions, experts say, is that all digital transactions involve digital currencies. In reality, services such as mobile money, banking apps, and online transfers are digital payment systems that move existing money electronically. The underlying currency remains the same national currency issued by a central bank. ALSO READ: What to know as virtual assets law takes effect “Digital payments refer to the transfer of money in electronic form rather than physical cash. They simply change the way money moves between individuals and businesses without creating a new form of currency,” said Kayode Babarinde, Executive Director of the Africa Blockchain Institute. “In essence, the underlying money remains the same; only the method of payment becomes digital.” For example, when someone sends money through MoMo or pays using a banking app, the transaction is digital, but the money itself remains the Rwandan franc. CBDCs are different. They are digital forms of national currencies issued directly by central banks and carry the same value as physical cash. ALSO READ: What to know about new draft law on virtual assets “Because a CBDC is issued and backed by a country's central bank, it carries the full trust and guarantee of the government, unlike cryptocurrencies and other digital assets that are not controlled or guaranteed by any state,” Babarinde said. He explained that CBDCs combine the stability of sovereign money with the speed and efficiency of digital technology. Rwanda is exploring a CBDC that could operate offline and through USSD on basic feature phones, potentially expanding access to digital financial services in rural areas and among people without smartphones. Cryptocurrencies such as Bitcoin and Ethereum operate very differently from both mobile money and CBDCs. They are generally decentralised, meaning they are not issued or controlled by governments or central banks. Their value is determined largely by market demand and supply, making them more volatile than conventional currencies. Cryptocurrencies also rely on blockchain technology, a decentralised digital ledger that records transactions across multiple computers. While cryptocurrencies are a type of virtual asset, the term virtual asset is broader and also includes digital tokens and other blockchain-based assets that can be traded, transferred, or used for investment purposes. As Rwanda rolls out its new virtual asset framework, authorities are seeking to regulate businesses operating in this space while maintaining a distinction between virtual assets and conventional digital payment services. Another term often used in discussions about digital finance is fintech. “And then there is fintech, which is a broad ecosystem of apps, platforms, and services that make sending, saving, borrowing, and receiving money faster and cheaper through mobile phones and the internet,” Babarinde said. Unlike digital currencies or virtual assets, fintech is not a form of money. Rather, it refers to the technologies and companies that provide digital financial services, including payment platforms, lending apps, mobile banking services, and digital savings products. Understanding the distinctions between digital payments, digital currencies, virtual assets, and fintech is becoming increasingly important as financial technologies evolve. Many consumers mistakenly assume that CBDCs are government versions of cryptocurrencies. In reality, experts say, they are fundamentally different systems. While CBDCs are issued and backed by central banks, cryptocurrencies operate independently of government control. Babarinde said concerns about data privacy and consumer protection must also be addressed as digital finance expands. “The solution is not to slow digitalisation but to strengthen digital literacy and consumer protection alongside technological innovation. While these technologies continue to evolve, their success will ultimately depend not only on innovation but also on public trust, financial literacy, and effective regulation.” As Rwanda enters a new era of virtual asset regulation, experts say a better understanding of digital money will help consumers and businesses navigate a rapidly changing financial landscape.

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Understanding digital money in the age of virtual assets