The National Bank of Rwanda prohibits financial services providers from engaging in crypto activities due to regulatory concerns and risks.
The National Bank of Rwanda (NBR) prohibited all financial services providers from engaging in crypto-related activities. The bank retaliates the absence of regulatory frameworks for most crypto assets, leaving consumers prone to malpractices.
The bank decided to ensure efficient and sound financial services in the country.
Residents in Rwanda Trading Digital Assets
Despite the central bank’s 2018 warning against crypto activities, Rwandan residents have continued to trade digital assets such as Bitcoin.
Available data shows that the residents have traded not less than three million U.S. dollars since January 2020.
NBR’s Concerns on Financial Institutions Engaging in Crypto Activities
The NBR’s acting governor, Soraya Hakuziyaremye, expressed concerns about the involvement of financial institutions in crypto activities. His sediments arise from the limited scope of crypto asset activities and the low risk they pose to the country’s financial and monetary system.
Hakuziyaremye’s letter pointed out that most crypto assets are unregulated; thus, users are not guaranteed the safeguards and guarantees associated with regulated financial services.
The letter also drew attention to the fraud cases associated with crypto investors in other countries. Countries such as Ruja Ignatova of Onecoin and Gerald Cotten of Quadriga crypto exchange were pointed out.
Hakuziyaremye also mentioned the recent investigations and sanctions against the crypto exchange, Binance, which had a presence in Rwanda. The UK’s Financial Conduct Authority (FCA) banned Binance due to its weak consumer and investor protection mechanisms.
Related; IMF Calls for Crypto Regulation Within Africa
Prohibition Will Remain in Place Until Regulatory Framework is Established
Hakuziyaremye’s letter concluded that the prohibition would remain in place until a regulatory framework is established in Rwanda. The NBR’s move is a growing trend in some African countries to clamp down on crypto activities. This trend stems from fraud, money laundering, and consumer protection concerns.
Recently, Nigeria’s central bank prohibited all financial institutions from dealing with crypto-related activities.
