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Regulating Virtual Asset Services in the CEMAC Zone: A look at the updated Financial Market Regulation
On December 14, 2022, the Financial Market Regulator of the CEMAC Zone (Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea, and Gabon), infused a breath of fresh air into crypto platforms with the publication of updated financial market regulation (the “Updated regulation”) that establishes a legal framework for crypto platforms operating within the zone.
This move follows several warnings from the regulator and national authorities (Such as Cameroon’s Minister of finance) regarding the lack of regulation for cryptoasset offerings in the CEMAC zone, as well as calls for companies offering cryptoassets to discontinue illegal fundraising operations.
Despite this, on April 22, 2022, the President of the Central African Republic enacted a law recognizing bitcoin as an alternative to the fiat currency of the CEMAC Zone applicable in this country.
In reaction to the above law, the Banking Commission of Central Africa in charge of regulating financial institutions within the CEMAC Zone issued a decision in May 2022 prohibiting regulated financial institutions and their partners from facilitating any kind of cryptoasset transactions.
The publication of the updated regulation introducing a legal framework for crypto platforms in the CEMAC zone is a positive development for the industry.
This updated regulation outlines the services considered virtual asset (“VA”) services and the providers of these services.
Virtual asset services
According to the updated regulation, virtual asset services consist of offering one or more of the following services or operations:
- providing custody for VAs on behalf of others;
- facilitating the exchange of VAs for legal tender or other VAs;
- operating trading platforms for VAs;
- offering other VA-related services such as receiving and transmitting orders for third parties, managing portfolios for third parties, giving advice, and making investments.
Virtual asset service providers
The updated regulation introduced a new category of actors in the market known as “Market Intermediaries”.
These intermediaries are defined as individuals or entities who regularly provide financial services, but must be accredited to do so.
A subset of Market Intermediaries is “Virtual Asset Service Providers” who specifically offer services related to virtual assets.
It is worth noting that the updated regulation, also includes virtual asset services as a type of financial service.
Overall, while waiting for the implementing instrument of the regulation, it is plausible to say a legal framework for crypto platforms in the CEMAC zone is a sign of relief for the industry.
For more information please see 4M Legal and Tax
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