The Bank of Ghana (BoG) is taking proactive steps towards establishing a regulatory environment for digital assets, including cryptocurrencies, by releasing draft guidelines. The bank is actively seeking input from various stakeholders, such as industry professionals, experts, and the general public, with a deadline set for August 31, 2024, to gather feedback that will inform the future direction of these regulations.
This initiative is driven by the recognition of the necessity for clear regulatory guidelines surrounding the activities involving digital assets. The draft guidelines are contingent upon the successful completion of a sandbox testing phase. The primary goals of the proposed regulations are to encourage innovation within the digital asset space while simultaneously addressing and mitigating the risks that these assets may pose.
According to the draft document, the establishment of a regulatory framework will necessitate all Virtual Asset Service Providers (VASPs) operating in Ghana to obtain authorization either from the BoG or the Securities and Exchange Commission (SEC). Entities that fail to register will be deemed to be operating unlawfully within the country.
The focus of the central bank’s regulatory framework is expected to be on exchanges and platforms that offer services related to virtual assets. The framework will clarify which types of assets are included and will set out rules for interactions between financial institutions and VASPs.
In its approach to regulation, the BoG has taken into account international guidance and regulatory standards set by organizations such as the Financial Action Task Force (FATF).
Comparatively, South Africa’s Financial Sector Conduct Authority (FSCA) is already ahead in the regulatory process, having started to accept license applications for crypto services in 2023. To date, the FSCA has approved 75 institutions to function as Crypto Asset Service Providers (CASPs) and is currently investigating thirty cases of unauthorized crypto service offerings.
Under Ghana’s proposed framework, VASPs will be required to implement customer due diligence, monitor transactions, and report any suspicious activities to the authorities. Additionally, VASPs and exchanges will need to adhere to the FATF’s Travel Rule, among other regulatory measures, to ensure compliance and enhance the integrity of the digital asset market in Ghana.
The Bank of Ghana (BoG) is set to introduce regulations that will enable Enhanced Payment Service Providers (EPSPs) to process transactions involving virtual assets for registered Virtual Asset Service Providers (VASPs). Additionally, commercial banks will be allowed to offer banking services to these registered VASPs, albeit with certain restrictions and conditions in place to ensure regulatory compliance and risk management.
In a similar vein, Kenya is making strides towards regulating cryptocurrency trading within its borders. The country is in the process of establishing a sectoral working group tasked with drafting a policy document. This document will lay out the necessary framework for regulating digital asset providers, detailing the required actions and identifying the regulatory body responsible for oversight.
June 2024 marked a significant milestone for the BoG in collaboration with the Monetary Authority of Singapore (MAS), as they successfully completed the first proof of concept (POC) for Project DESFT (Digital Economy Semi-Fungible Token). Initiated in 2023, Project DESFT is an innovative endeavor aimed at developing solutions that encompass Universal Trusted Credentials (UTCs), Central Bank Digital Currency (CBDC), stablecoins, and a dedicated trade marketplace. This project represents a forward-thinking approach to embracing the digital economy and its associated technologies.
Furthermore, the Bank of Ghana has launched a centralized online foreign exchange trading platform, which became operational on August 1, 2024. This platform is designed to enhance the security and efficiency of transactions within the foreign exchange market, reflecting the bank’s commitment to modernizing financial infrastructure and improving the overall functionality of the market.
