The National Bank of Rwanda (NBR) and the Capital Markets Authority of Rwanda (CMA) have taken a significant step towards regulating the digital finance sector by introducing a draft regulatory framework for virtual assets and service providers.

Released on March 6, 2025, the draft law is open for public feedback and aims to establish clear guidelines for virtual assets, including cryptocurrencies and tokenised physical assets.

This move is designed to strike a balance between promoting innovation and mitigating risks such as money laundering and fraud.

Bringing Order to the Digital Asset Landscape

Rwanda’s financial authorities recognise the potential of virtual assets but also acknowledge the risks associated with unregulated digital finance.

CMA’s Carine Twiringiyimana emphasised that the new regulations are primarily intended to protect consumers, given the rise of scams where crypto buyers have lost funds to untraceable sellers.

The draft framework includes strict compliance measures, requiring licensing for virtual asset service providers (VASPs) and explicitly banning the tokenisation of Rwandan currency.

Once enacted, the law promises to bring clarity and structure to Rwanda’s virtual asset market. This shift in oversight from the Rwanda Investigation Bureau (RIB) to a structured regulatory framework under the CMA aims to instill greater transparency and accountability within the sector.

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Public Participation in Shaping the Law

In a joint announcement, the CMA and NBR invited public feedback on the draft law regulating virtual assets. This move aligns with global best practices that encourage public participation in financial policymaking.

Stakeholders, including fintech experts, legal professionals, bankers, and investors, are urged to review the draft and provide comments via email at virtualassets@cma.rw by March 14, 2025.

Additionally, CMA and NBR will host a virtual consultation meeting on March 17, 2025, at 10:00 AM to discuss the proposed regulations in greater detail. Interested participants can join the discussion via this Zoom link.

Key Provisions of the Draft Law

The draft law places virtual assets and VASPs under the regulatory oversight of the CMA, which will establish licensing requirements for these service providers.

However, it reinforces that cryptocurrencies will not be recognised as legal tender within Rwanda. This follows the National Bank of Rwanda’s 2023 warning against cryptocurrency involvement due to the assets’ volatility and potential for financial loss.

Additionally, the law introduces several prohibitions, including:

• Crypto mining activities
• Operation of cryptocurrency ATMs
• VASPs offering mixing and tumbling services (which obscure transaction origins)

The framework also outlines the regulation of Initial Coin Offerings (ICOs), tokenised real-world assets, and stablecoins, ensuring that digital financial instruments operate within a structured and secure legal environment.

Enhancing Security with the ‘Travel Rule’

One of the key compliance measures introduced in the framework is the enforcement of the ‘travel rule’ among licensed VASPs. This rule mandates cryptocurrency exchanges to collect and share transaction information about individuals engaging in crypto transactions.

The regulation aligns with recommendations from the Financial Action Task Force (FATF) to curb the misuse of virtual assets for illicit activities.

Operating an unlicensed VASP in Rwanda will carry heavy penalties, including fines of up to 30 million Rwandan francs ($21,000) and imprisonment for up to five years. These strict measures aim to deter illicit activities and enhance investor confidence in the virtual asset space.

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A Step Towards Safer Digital Finance

CMA’s Carine Twiringiyimana pointed out that the regulatory framework is a response to concerns raised by the FATF, which has warned about the risk of digital assets being used for money laundering.

By implementing this framework, Rwanda is taking a proactive approach to mitigate financial crime while supporting responsible growth in the virtual asset sector.

As the country positions itself as a hub for fintech innovation, the introduction of these regulations marks a significant milestone in ensuring that digital assets are used securely and transparently.

With clearer rules in place, Rwanda’s financial authorities hope to create an ecosystem that promotes trust among consumers and investors while preventing misuse of digital finance.

For further details and participation in the discussion, stakeholders are encouraged to review the draft law and contribute their insights before the March 14 deadline.