Rwanda Government Orders Banks to Stop Facilitating Crypto-Related Transactions

According to the National Bank of Rwanda, the country’s regulated financial services providers are now prohibited from facilitating crypto-related transactions. In her Jan. 31 letter justifying the decision, the acting governor Soraya Hakuziyaremye cites the unregulated status of most crypto assets and how this leaves users without the “guarantees and safeguards associated with regulated financial services.”

Rwanda’s Growing Interest in Crypto

The National Bank of Rwanda (NBR) has said the country’s financial services providers are forbidden from engaging in “any crypto-related activities until a regulatory framework has been put in place.” In a letter addressed to managing directors and CEOs of financial services providers, the NBR’s acting governor Soraya Hakuziyaremye suggested that the prohibition would help to ensure “efficient and sound financial services.”

Despite the central bank’s 2018 warning against crypto-related activities, Hakuziyaremye acknowledged in her letter that Rwandan residents have continued to trade digital assets like bitcoin. According to the letter, available data suggest that “more than three million U.S. dollars were traded on [the] Rwanda market since January 2020.”

Meanwhile, in the same letter, Hakuziyaremye sought to justify the central bank’s decision to bar financial services providers from facilitating crypto-related transactions.

“Although crypto asset activities are still limited and therefore, do not pose substantial risks to [the] financial and monetary system of Rwanda, the NBR is concerned about the involvement of the financial institutions in crypto activities,” Hakuziyaremye said.

Crypto-Related Activities Lack ‘Guarantees and Safeguards Associated With Regulated Financial Services’

In the Jan. 31 letter, the acting NBR governor cites the unregulated status of most crypto assets and how this leaves Rwandese users without the “guarantees and safeguards associated with regulated financial services.” The letter also points to how crypto investors elsewhere have been defrauded by scammers like Ruja Ignatova of Onecoin and Gerald Cotten of Quadriga crypto exchange.

Hakuziyaremye’s letter also attempts to draw Rwandan crypto investors’ attention to the decisions that some regulators have taken against unregulated crypto entities.

“For example, Binance, whose presence was noticed in Rwanda, is under investigation in the United States of America over money laundering allegations. The same company has been banned by the Financial Conduct Authority (FCA) due to weak consumer and investor protection mechanisms,” the acting governor said.

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