- Despite a trading restriction, Ethiopia’s FIS is preparing crypto laws.
- Regulations combat money laundering and terrorist financing.
- Collaboration with the UN and regional partners to develop policies.
Ethiopia’s ban on virtual currency trading is still on, and the country’s Financial Intelligence Service (FIS) has developed regulations to regulate cryptocurrency transactions. The move is supposed to prevent money laundering and the funding of terrorism, and to bring those steps in line with the international financial standards. As a result, the initiative is a reflection of Ethiopia’s attempts to balance innovation and economic stability.
New Crypto Regulations in Ethiopia
The FIS is working on a system to oversee and control the operations of virtual currencies. It follows reports of surging illicit crypto transactions and a move by authorities to tighten oversight. Regulations will concentrate on tracking suspicious activity and supporting compliance with laws of a financially related nature. Ethiopia outlawed cryptocurrencies in 2022, making the birr the only legal money. The government recognized that with the proliferation of the digital economy, enforcing such a ban is not an easy thing to do.
Authorities are working out these rules with the UN and other international or regional allies. Training programs are training the FIS staff’s expertise in detecting crypto-related crimes. The task is to defend our financial system without obstructing new technologies, an FIS official says. Also, the regulations will consider the prospect of a central bank digital currency (CBDC) in the modernization of Ethiopia’s financial infrastructure.
As a result, the market was made operational by the National Bank of Ethiopia (NBE) via weekly foreign currency auctions. They are part of a wider effort to beat back inflation and to clamp down on black market activities. The regulation of cryptocurrency is considered as another step towards increased financial oversight.
Balancing Innovation and Financial Security
Cryptocurrencies are taking off worldwide, and so is Ethiopia’s effort to regulate them. They want to restrict their risks without curbing the tech progress. Authorities will require crypto platforms to register and will also oblige them to report suspicious transactions. This follows the rules set down by the Financial Action Task Force (FATF), an international organization that combats money laundering.
The FIS is also studying CBDC models to promote financial inclusion. It could be a digital bill that would simplify paying each other, and with that, reduce the use of cash, especially in rural areas. An NBE official said a CBDC presents one on efficiency and transparency. Pilot programs are being considered after Nigeria launched its eNaira in 2021.
Despite the ban on cryptocurrency by Ethiopia, crypto use is on the rise as the tech-savvy youth and business are pushing for crypto use as a means of payment. Now, the concern for taxation and black market fraud is also with crypto. The second regulation tries to control these activities while encouraging a safe environment for safe innovation. Enforcement will involve stricter penalties for unlicensed crypto operations.
The cautious approach of the government is explained by Ethiopia’s foreign currency shortages and inflation. Authorities want to regulate it by way of cryptocurrencies, while protecting the financial system, and attracting foreign investment. The FIS will soon start public consultations and wrap up the regulations by mid-2026.
The post Ethiopia Regulates Crypto Despite Ongoing Ban appeared first on Live Bitcoin News.
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