Ghana's Central Bank Unveils Draft Regulations to Govern Cryptocurrency Usage and Adoption

The Bank of Ghana (BoG) has introduced a draft set of regulations aimed at overseeing cryptocurrency use within the country. This proposal follows a detailed review of the increasing popularity of digital assets and reflects the central bank's intention to create a regulatory environment that promotes financial stability and inclusion.

Promoting Financial Innovation

As cryptocurrency usage grows in Ghana, this regulatory attention could stimulate further adoption and innovation within the local industry. Entrepreneurs may feel encouraged to develop new crypto businesses or integrate cryptocurrency with existing financial services. Digital assets have the potential to address inefficiencies in traditional systems, such as enabling faster and more accessible remittance services.

While recognising the benefits of digital assets, the Bank of Ghana also highlights concerns about potential risks, including cyber-theft, money laundering, and terrorism financing. To mitigate these risks, the draft framework proposes regulations that aim to balance innovation with security. Key measures include promoting international cooperation to combat financial crime and improving domestic risk management.

VASPs and Regulatory Compliance

The proposed regulation specifically targets virtual asset service providers (VASPs), such as crypto exchanges, defining how these entities must interact with financial institutions. VASPs would be required to monitor transactions, carry out customer due diligence, and report suspicious activity to the Financial Intelligence Centre (FIC). In addition, they must implement a risk-based approach to ensure that financial crime is identified and prevented.

Broader Scope

The regulations may extend beyond exchanges to include other cryptocurrency services, such as platforms that offer crypto gambling. Enhanced payment service providers (EPSPs) could also be permitted to process crypto transactions, but only if they are registered as VASPs. However, EPSPs would be prohibited from owning or operating any crypto-related businesses themselves.

Public Consultation

The Bank of Ghana seeks input from industry stakeholders and the public to refine these regulations. Interested parties have been invited to submit their recommendations by August 31, 2024, as the central bank aims to foster a balanced regulatory framework that encourages growth while managing risks.

Conclusion

Ghana’s proposed crypto regulation reflects the country's interest in supporting financial innovation while addressing the associated risks. The Bank of Ghana’s regulatory efforts mark a significant step towards formalising cryptocurrency use in Ghana, though concerns about financial crime and security remain central to the discussion.