Ghana’s Central Bank Proposes Draft Regulation to Oversee Cryptocurrency Use and Adoption

Key Points:

• Ghana has set forth draft rules to regulate the country’s crypto sector.
• When fully established, the regulatory framework will acknowledge the benefits of crypto but also address potential risks.
• The central bank is calling for responses and recommendations from stakeholders and the general public.

The Bank of Ghana (BoG) has published a set of regulations for the use of cryptocurrencies in the country. The central bank is issuing the draft guidelines after an extensive review of the increase in crypto’s popularity and usage in Ghana. According to the publication, the rules signify the institution’s commitment to creating a conducive regulatory environment that encourages financial inclusion and stability.

The decision to pay attention to Ghana’s crypto space could boost the local industry. Crypto usage would likely increase, along with a willingness from entrepreneurs to create crypto businesses or support integration with traditional solutions. This is because crypto services tend to address issues with centralized and traditional systems, providing solutions to longstanding problems. For instance, fun lovers can easily enjoy playing casino games online by joining one of several top no verification casinos to start betting and playing for large jackpots without providing personally identifiable information. Meanwhile, it is much easier to send international remittances when using crypto, compared to lengthy bank transfers.

Ghana’s central bank writes that citizens have increasingly used various digital assets over the last three years. According to the BoG, factors driving this increase include high internet usage and mobile penetration, a tech savvy youth population, and an increase in the number of virtual asset service providers (VASPs). Although the apex bank understands there are multiple benefits of digital assets, it mentions several risks, such as cyber-theft, terrorism financing, and money laundering. 

Nonetheless, the BoG hopes that the regulatory proposal will “foster innovation” in addition to “effectively managing risks associated with digital assets.” The draft also itemizes several other regulatory objectives of the proposed framework. These include promoting international cooperation in combating financial crime and encouraging domestic risk management coordination because of risks posed by VASPs.

Ghana’s proposed regulation intends to target crypto exchanges and similar platforms trading cryptocurrencies. The framework will also specify what types of cryptocurrencies are covered and the rules of engagement between VASPs and financial institutions like banks. Furthermore, the regulation will require contributions from related authorities and agencies in the country to guide the growth and adoption of crypto in Ghana.

“The [BoG] will collaborate with other regulatory agencies, such as the SEC, to develop and implement complementary frameworks aligned with each institution’s regulatory mandate. This approach will ensure a comprehensive regulatory framework to effectively address the diverse use cases of virtual assets.” 

The draft publication also contains specifics of proposed measures. For instance, VASPs must monitor transactions, conduct customer due diligence, and report suspicious transactions to Ghana’s Financial Intelligence Centre (FIC). In addition, they must conduct risk assessments and apply a risk-based approach that helps prevent and report financial crime. The BoG may extend these rules to other crypto services besides exchanges, such as crypto gambling platforms.

To further adoption, the apex bank intends to allow enhanced payment service providers (EPSPs) to process crypto transactions. However, this would be exclusively for registered VASPs. Outside of these VASP-related transactions, ESPs cannot own or operate any crypto exchanges or conduct any crypto-related businesses, including custody services.

The BoG intends to consult with stakeholders and is calling for responses from industry players and the general public. It hopes to use these responses to create a balanced approach to regulation and encourages interested entities to send their recommendations by August 31, 2024.