1. Rise in Demand for Cryptocurrencies in Ghana
2. Key Regulatory Measures
3. Implementation Preparations and Feedback

The Bank of Ghana has released draft guidelines for virtual asset service providers to regulate this rapidly growing sector.

Rise in Demand for Cryptocurrencies in Ghana

According to the Bank of Ghana’s August 16 draft, there has been a spike in demand for cryptocurrencies in the nation, prompting the need for regulation to counter various risks typically associated with this emerging asset class. Ghana, like other South African nations, has faced economic challenges, pushing residents towards alternative assets such as Bitcoin (BTC) as a hedge against inflation. The growth has also been driven by a tech-savvy population, widespread internet access, and the rise of virtual asset service providers (VASPs).

Key Regulatory Measures

The central bank proposed several key measures to regulate the sector, including stringent registration requirements, enhanced reporting obligations, and compliance with global standards. Per the draft law, VASPs will be required to adhere to anti-money laundering and counter-terrorism financing regulations, and report suspicious transactions to the Financial Intelligence Centre. The entities would also be mandated to conduct regular risk assessments and comply with the FATF’s Travel Rule, which requires reporting transaction details.

Implementation Preparations and Feedback

When signed into law, VASPs would have to register with the Bank of Ghana or the Securities and Exchange Commission, depending on their service offerings. To offer services, such entities must demonstrate a satisfactory internal control and risk management framework alongside capital and solvency requirements. VASPs that don’t register within the specified timeframe would be deemed illegal. Before fully implementing these regulations, the BoG plans to collaborate with other regulatory bodies to conduct a 'sandbox testing process' with a controlled group of VASPs. The draft regulations are currently open for public feedback until August 31, 2024, after which they will be reviewed and potentially finalized. The Bank of Ghana is also developing its central bank digital currency, the eCedi, and has partnered with Giesecke+Devrient, a German banknote and securities printing company, to provide the project's base infrastructure.

The draft guidelines from Ghana's central bank for virtual asset service providers are a critical step towards regulating this rapidly growing sector. It will help mitigate risks and build public trust in digital assets.