Ghana is finally ready to regulate cryptocurrencies

Ghana’s central bank, the Bank of Ghana (BoG), has finally decided to step up and regulate cryptocurrencies. They just released a draft of new rules that are supposed to bring some order to the chaotic world of crypto. 

The BoG is also asking the public and industry players to give feedback on these new regulations before they become the rule of the land.

In Ghana, cryptos are becoming popular for payments and even banking, but there’s a lot of gray area. 

The BoG said it has noticed that with the increasing number of transactions between cryptos and regular money like the Ghanaian Cedi or the US Dollar, it’s time for some serious oversight.

New regulatory objectives

The BoG’s regulatory goals are straightforward, even if they’ve been a long time coming. First off, they want to keep the financial sector stable and not let it get wrecked by unmonitored crypto activities. 

They’re also out to protect consumers and investors who might get burned if the crypto market goes belly up. On top of that, they’re keen on preventing money laundering and terrorist financing, which are big concerns when it comes to anonymous digital currencies. 

So, what’s the scope of these new regulations? The BoG plans to keep a close eye on exchanges and other platforms that allow people to buy, sell, trade, or store cryptos. They’re not going it alone, though. 

They’ll be teaming up with other regulatory bodies like the Securities and Exchange Commission (SEC) to create a comprehensive framework that covers all the bases.

The proposal

The BoG is starting with a testing phase, which they call a “sandbox testing process.” This involves a small number of Virtual Asset Service Providers (VASPs) being put through the wringer to see how they handle under scrutiny. 

If these VASPs can prove they can play by the rules during this testing phase, then the BoG will move forward with rolling out a full-fledged regulatory framework.

Part of this framework will involve strict regulations for VASPs, especially when it comes to money laundering (ML) and terrorism financing (TF). 

The BoG wants these providers to do thorough customer due diligence, monitor transactions, and report any sketchy activity to the Financial Intelligence Centre (FIC). This is going to be a requirement. 

They’ll also have to align with FATF’s Travel Rule, which means they need to share info about the originators and beneficiaries of transactions. No more hiding behind anonymity.

Now, let’s talk about Enhanced Payment Service Providers (EPSPs). These guys might be allowed to process virtual asset transactions, but only if they’re dealing with registered VASPs. 

But there’s a big catch: EPSPs won’t be allowed to operate exchanges, hold virtual assets, or provide custodial services. If they want to get into the crypto game, they’ll have to create separate entities that handle these activities, and those entities can’t be funded by the EPSP itself.

Commercial banks won’t be left out either. They can provide banking, payment, and settlement services to registered VASPs, but they’ll have to follow the same conditions laid out for EPSPs.