Lebanon’s Cryptocurrency Regulatory Landscape Prior to 2024

As of the years leading up to 2024, Lebanon’s stance towards cryptocurrencies can be characterized as cautious and evolving, with a focus on risk management and consumer protection.

Central Bank’s Position and Warnings

Early Warnings and Concerns: The Banque du Liban (BDL), Lebanon’s central bank, had been issuing warnings about cryptocurrencies, particularly bitcoin, since 2013. The BDL highlighted the risks associated with the use of cybercurrencies, emphasizing that the platforms and networks used for issuing and trading such currencies were not subject to any laws or regulations. This stance underscored the bank’s concern about the lack of regulatory oversight and the potential risks for users​​.

Exploration of a Central Bank Digital Currency (CBDC): In 2017, Riad Salameh, the Governor of the BDL, announced the institution’s intention to launch its own cybercurrency. Acknowledging the future significance of electronic currency, Salameh emphasized the necessity of developing a protection system against cybercrime before introducing such a currency. This statement indicated an awareness of the growing role of digital currencies and the need for a regulated and secure approach to their implementation​​​​.

Opposition to Bitcoin and Unregulated Cryptocurrencies: Salameh expressed opposition to the use of bitcoin, citing its unregulated nature as a threat to consumers and to Lebanon’s payment system. This opposition was consistent with the central bank’s cautious approach to digital currencies that operate outside the traditional financial system​​.

Legal Status and Trading of Cryptocurrencies

Legal Status of Cryptocurrencies: As of the period leading up to 2024, the use of cryptocurrencies in Lebanon was not illegal. However, the Central Bank of Lebanon issued multiple warnings about the risks associated with these digital currencies, stressing that they were not recognized as legal tender in the country. This stance implied that while trading or owning cryptocurrency was not against the law, it was done at the user’s own risk, without any governmental protection or assistance​​​​.

Regulatory Framework Under Development: The laws and regulations surrounding cryptocurrency in Lebanon were still under development during this period. The central bank’s circulars mainly served as warnings, emphasizing the unregulated nature of cryptocurrencies and advising caution in their use. The absence of explicit penalties for non-compliance indicated that the regulatory framework was still in a nascent stage​​.

Cryptocurrency Trading Risks: While cryptocurrency trading was not explicitly illegal, the Central Bank cautioned against it. This lack of explicit regulation meant that there were no protections in place for traders, and the government would not be able to assist in case of any problems. This situation reflected the broader uncertainty and risks associated with cryptocurrency trading in an environment with limited regulatory guidance​​.

Conclusion

Prior to 2024, Lebanon’s approach to cryptocurrency regulation was marked by caution and a gradual evolution towards creating a legal framework. The central bank played a pivotal role in issuing warnings and highlighting the risks associated with digital currencies, while also exploring the potential of a state-backed digital currency. The absence of explicit laws and regulations for cryptocurrencies meant that their use and trading were fraught with risks, with the government unable to provide protection or assistance. This cautious and evolving stance reflected the broader challenges faced by countries globally in integrating cryptocurrencies into their existing financial and legal systems.