The National Bank of Rwanda has told all financial institutions in the country that they can’t do “any crypto-related activities” until a regulatory framework is put in place. The East African country has followed the examples of Zimbabwe and Nigeria by making it illegal for banks to handle transactions in cryptocurrencies.
The NBR’s acting governor, Soraya Hakuziyaremye, explained the rationale for the decision in a letter to the heads of financial institutions and their respective regulatory bodies dated January 31.
She said that because cryptocurrencies are not regulated, their users do not have the “guarantees and safeguards associated with regulated financial services.”
In its letter, the NRB references the deception of cryptocurrency investors by con artists such as Ruju Ignatova of Onecoin and Gerald Cotten of the Quadriga crypto exchange.
In November, the International Monetary Fund (IMF) reported that fewer than a quarter of sub-Saharan African nations have formal crypto regulation in place. About two-thirds have instituted some form of regulation, and six nations have outright banned cryptocurrency: Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of the Congo.
Banks in Zimbabwe have been told to stop processing transactions, and a crypto startup in Liberia has been told to shut down. The use of cryptocurrencies in a number of African countries has been outrightly forbidden.
BusinessCompiler reports that by the end of 2021, twenty-three African countries will have completely banned the use and trading of cryptocurrencies. It found that 4 African countries outright banned cryptocurrencies, while another 19 imposed implicit restrictions on digital assets.
The central bank of Rwanda issued a warning to its citizens in 2018 to avoid crypto transactions. Hakuziyaremye admitted that people in Rwanda have maintained the trading of cryptocurrencies like Bitcoin.
Based on the information at hand, the letter claims that “more than three million U.S. dollars were traded on the Rwandan market since January 2020.” Users’ stability is of paramount importance to NBR, which is why it aims to shield them from the crypto market’s swings. “
The Central Bank of Rwanda is concerned that their customers who use cryptocurrencies will be vulnerable in a market without “the guarantees and safeguards associated with regulated financial services.” As a result, financial institutions have had their involvement in crypto-related transactions limited in order to safeguard them against a potential collapse.
