The State of Cryptocurrency Regulation in Africa: A Country-by-Country Analysis

INPUT: Cryptocurrency adoption in Africa has experienced remarkable growth in recent years, driven by a combination of unique economic challenges and technological innovation.

The continent has become a hotspot for crypto activity, with countries like Nigeria, Kenya, and South Africa leading the way in trading volumes, peer-to-peer transactions, and blockchain-based solutions. For many Africans, cryptocurrency offers a lifeline in navigating issues such as inflation, limited access to traditional banking, and the high cost of cross-border remittances.

The rise of digital currencies has sparked debates on balancing innovation with consumer protection, addressing financial crimes, and fostering economic growth.

This article examines the current state of crypto regulation in Africa, highlighting the countries that have active legal regimes allowing crypto activity at the end of 2024.

1.) South Africa

South Africa has established itself as a frontrunner in cryptocurrency regulation on the African continent.

In October 2022, the Financial Sector Conduct Authority (FSCA) classified crypto assets as ‘financial products’ under the Financial Advisory and Intermediary Services Act, requiring Crypto Asset Service Providers (CASPs) to obtain licenses.

🇿🇦REGULATION | FSCA Approves 20 More Crypto Asset Service Providers (CASPs)

The Financial Sector Conduct Authority (FSCA) has approved twenty (20) more applications for rendering crypto asset services in South Africa.

This brings… pic.twitter.com/011000330I

— BitKE (@BitcoinKE) December 1, 2024

By late 2024, the FSCA had approved 248 CASP licenses, following rigorous evaluations of applicants’ security measures, governance, and anti-money laundering (AML) capabilities.

🇿🇦REGULATION | South Africa Has Now Approved 248 Crypto Providers Out of 420 Received So Far, Only 9 Applications Rejected

This post identifies two key areas that resulted from applications getting rejected by the FSCA.https://t.co/9osgvhErjt @fscasouthafrica pic.twitter.com/2fvVgBZoty

— Bitcoin Kenya (@BitcoinKE) December 16, 2024

Further strengthening oversight, the country’s Financial Intelligence Centre Act was amended to include CASPs as accountable institutions, mandating compliance with AML regulations, customer due diligence, and suspicious transaction reporting. This proactive approach has legitimized the crypto industry, encouraging traditional financial institutions to engage with digital assets and creating a secure, integrated financial ecosystem.

South Africa’s comprehensive regulatory framework has served as a benchmark for other African nations, showcasing how clear policies can promote innovation while safeguarding financial stability.

2.) Mauritius

Mauritius has established itself as a forward-thinking jurisdiction in the regulation of virtual assets and related services. The enactment of the Virtual Asset and Initial Token Offering Services (VAITOS) Act on February 7 2022 marked a significant milestone in the country’s efforts to provide a comprehensive regulatory framework for the virtual asset industry.

Key Features of the VAITOS Act

Mauritius does not impose capital gains tax; therefore, gains from the disposal of crypto assets are generally exempt from taxation. However, if such gains are considered as trading profits, they may be subject to income tax. The classification depends on the nature of the transactions and the intent behind holding the assets.

3.) Namibia

On July 25 2023, Namibia enacted the Virtual Assets Act 2023, signaling a pivotal shift towards the regulation of virtual assets and service providers.

REGULATION | The Namibian 🇳🇦 Government Officially Gazzettes the Virtual Assets Act 2023 into Law to Regulate Virtual Asset Service Providers

The Namibia Virtual Assets Bill is now a law after its gazzettment. Namibia now joins South Africa 🇿🇦 and Nigeria 🇳耆as the African… pic.twitter.com/yoJZxzofd2

— Bitcoin Kenya (@BitcoinKE) July 27, 2023

The Act, which was the 3rd of its kind in Africa, mandated that Virtual Asset Service Providers (VASPs) obtain licenses to operate within Namibia, ensuring compliance with established standards.

The Act provisioned a designated Regulatory Authority tasked with overseeing and supervising VASPs and related activities, aiming to ensure consumer protection and the integrity of the financial system.

Previously in 2017, the Bank of Namibia issued a position paper declaring that virtual currencies were not recognized as legal tender and prohibiting their use for payment of goods and services. Additionally, the establishment of cryptocurrency exchanges was deemed illegal under the Exchange Control Regulations of 1961.

4.) Seychelles

Seychelles is one of the leading countries for crypto entrepreneurs with blockchain startups in the country having received the most venture capital in 2023.

🇸🇨REPORT | Seychelles Accounted