The Legislative Landscape for Cryptocurrencies in Tanzania Prior to 2024

Initial Skepticism and Caution

In the early stages, the regulatory approach to cryptocurrencies in Tanzania was marked by skepticism and caution. In 2017, the Director of National Payment Systems of the Bank of Tanzania (BoT) declared that crypto assets were not recognized in the country. This stance was a reflection of the lack of recognition and acceptance of crypto assets within the Tanzanian financial system. Additionally, individuals who used cryptocurrencies were informed that they would not receive assistance from official channels in case of any issues, further underscoring the government’s cautious approach​​.

Ban on Crypto Assets

Following this initial skepticism, the Bank of Tanzania took a more definitive stance by banning the use of crypto assets. The central bank issued public notices stating that the only legal tender in Tanzania was the Tanzanian Shilling. This ban was in line with the existing foreign exchange regulations, and it emphasized the bank’s exclusive authority to issue legal tender in the country. As a result, trading, marketing, and using virtual currencies were officially declared as unauthorized activities​​​​.

Absence of a Specific Legal Framework

Despite these measures, Tanzania lacked a specific legal framework for regulating crypto assets through the Bank of Tanzania. The central bank indicated that it was studying internet currencies with the aim of finding a permanent regulatory solution, but as of the end of 2022, no specific regulations or legislation had been enacted to govern digital currencies​​​​.

Thriving Crypto Asset Mining Sector

Interestingly, despite the lack of regulations and the ban on crypto assets, Tanzania developed a substantial crypto asset mining sector. It was rated 72nd out of 249 countries actively involved in digital currency mining. This level of activity led to significant electricity consumption, with crypto asset mining consuming more electricity than the entire non-crypto asset-related electricity consumption of the country​​​​.

Shift in Attitude and Exploration of Regulatory Frameworks

In recent years, there has been a noticeable shift in the Tanzanian government’s attitude towards crypto assets. President Samia Suluhu Hassan called for the exploration of crypto assets and the development of a regulatory framework. This shift indicated a growing recognition of the potential benefits of crypto assets and the need for a regulatory framework to govern their use​​.

Consideration of a Central Bank Digital Currency (CBDC)

Aligning with global trends, the Bank of Tanzania is considering launching its own central bank digital currency (CBDC). This move is seen as a way to provide a secure and regulated alternative to crypto assets, addressing concerns about their volatility and lack of regulation, while also enhancing financial inclusion, reducing transaction costs, and improving efficiency in payment systems​​.

Regulatory Challenges and Opportunities

The regulatory landscape in Tanzania presents several challenges and opportunities. The lack of comprehensive regulations governing digital currencies poses challenges for the government and regulators. To address these, Tanzania needs to develop comprehensive regulations and legislation governing crypto assets, decentralized finance, and blockchain technology. Additionally, promoting financial inclusion, addressing risks and challenges associated with crypto assets, fostering innovation and collaboration, enhancing financial infrastructure, and balancing regulation and innovation are essential steps to be considered​​.

In conclusion, Tanzania’s regulatory landscape for crypto assets, as of the end of 2022, has evolved from initial skepticism and a ban to exploring potential regulatory frameworks. This evolution suggests potential regulatory changes in the future, setting the stage for a transformed crypto asset landscape that could bring innovation and enhanced financial inclusion.

Add a Comment

Your email address will not be published. Required fields are marked *