Bangladesh -- Securities Classification Regulatory Overview

Bangladesh does not have a specific legal framework or a distinct "Howey test equivalent" for classifying cryptocurrency tokens as securities. Instead, the primary regulatory approach has been one of outright prohibition and strong warnings against cryptocurrencies in general, driven predominantly by the Bangladesh Bank (BB).

Given this overarching prohibition, the question of classifying crypto tokens as securities, or developing nuanced regulatory tests for them, has largely not arisen in the same way it has in jurisdictions that permit and regulate crypto.

Here's a breakdown based on the current regulatory landscape:

1. Legal Test Used (Howey Test Equivalent)

There is no specific legal test (like the Howey test) adopted or developed by Bangladesh to classify cryptocurrency tokens as securities.

While the Bangladesh Securities and Exchange Commission (BSEC) is the primary regulator for securities, it has not issued any specific guidance or regulations on cryptocurrencies. If BSEC were ever to consider regulating crypto as securities, it would likely refer to the broad definition of "security" under the Securities and Exchange Ordinance, 1969. This Ordinance defines "security" to include:

• Shares, scrips, stocks, bonds, debentures, debenture stocks, or other marketable securities of a like nature;
• Government securities;
• Modarabah certificates;
• Unit shares, and any instrument declared by the Commission to be a security.

The "any instrument declared by the Commission to be a security" clause provides a theoretical mechanism for BSEC to categorize new instruments, but it has not been invoked for cryptocurrencies.

2. Which Tokens are Considered Securities

No cryptocurrency tokens are explicitly classified as securities under Bangladeshi law.

Given the Bangladesh Bank's stance, all cryptocurrencies are generally viewed with suspicion and are subject to the same prohibitions, regardless of their underlying technology, use case (utility, security, payment), or purported nature. The regulatory framework does not distinguish between different types of tokens (e.g., utility tokens vs. security tokens) when it comes to their legality.

3. Registration/Exemption Requirements for Token Issuers

There are no specific registration or exemption requirements for token issuers related to securities laws because crypto tokens are not explicitly recognized or regulated as securities.

However, issuing any cryptocurrency or facilitating its creation would likely fall under the general prohibitions and warnings issued by the Bangladesh Bank. Therefore, any entity attempting to "issue" tokens would be operating in a legally precarious, if not outright prohibited, zone, facing significant legal and financial risks under existing foreign exchange, banking, and anti-money laundering laws.

4. Secondary Trading Rules

There are no specific rules for secondary trading of crypto tokens as securities because they are not classified or regulated as such.

Any form of trading, holding, buying, or selling of cryptocurrencies is encompassed by the general prohibitions issued by the Bangladesh Bank. Engaging in secondary trading would put individuals and entities at risk of violating these prohibitions, foreign exchange regulations, anti-money laundering (AML), and countering the financing of terrorism (CFT) laws.

5. Enforcement Examples

Enforcement in Bangladesh regarding cryptocurrencies has largely focused on preventing their use as currency, safeguarding financial stability, and combating money laundering and terrorist financing, rather than enforcing securities regulations specific to crypto.

• Warnings to Financial Institutions: Bangladesh Bank has repeatedly issued warnings to all banks and financial institutions against dealing in, facilitating, or promoting cryptocurrencies. These warnings serve as an instruction to financial institutions to block transactions related to crypto.
• Prohibition on Use and Exchange: Law enforcement and regulatory bodies have acted against individuals and groups involved in unauthorized foreign exchange transactions or money laundering using cryptocurrencies. For instance, there have been reports of arrests for operating illegal crypto exchanges or facilitating crypto transactions that violate the Foreign Exchange Regulation Act, 1947, and the Money Laundering Prevention Act, 2012. These are generally broader criminal charges, not specific securities violations related to crypto.
• Preventing Capital Outflow: The government views cryptocurrencies as a potential channel for capital flight and illegal remittances, leading to vigilance and action against such activities.

Specific Legislation and Regulatory Guidance URLs

It's important to note that direct official URLs from Bangladesh Bank or BSEC websites can sometimes be hard to locate for older circulars, but their content is widely reported and acknowledged.

1. Bangladesh Bank Circular (December 26, 2017) - Prohibition on Virtual Currencies:

   • Reference: GFXD-8/2017-3479.
   • Content: This circular explicitly warned against the use of virtual currencies like Bitcoin, stating they are not legal tender, lack central authority, are prone to money laundering and terrorist financing, and carry risks for users. It urged financial institutions to take necessary measures to prevent transactions involving virtual currencies.
   • Direct BB URL is often not publicly archived for older circulars in an easily accessible format. However, its content is widely cited by legal firms and news outlets in Bangladesh.

2. Bangladesh Bank Circular (July 27, 2021) - Reiterating Warnings:

   • Reference: GFXD-1/2021-3814.
   • Content: Reaffirmed the position from the 2017 circular, reiterating the prohibition on all forms of virtual currencies/cryptocurrencies and emphasizing the associated risks including money laundering, terrorist financing, and foreign exchange violations. It specifically mentioned penalties under the Money Laundering Prevention Act, 2012, and the Foreign Exchange Regulation Act, 1947.
   • Similar to the above, direct BB URL may not be readily available for public access in English versions, but its content is well-documented.

3. The Securities and Exchange Ordinance, 1969:

   • This is the primary legislation governing securities in Bangladesh. While it doesn't mention cryptocurrencies, it would be the foundational law if BSEC were ever to regulate them.
   • URL (Ministry of Law, Justice and Parliamentary Affairs - Bangladesh):
     • http://bdlaws.minlaw.gov.bd/act-details-180.html (Bengali version, English version link usually available on the same portal or through legal databases).

In summary, Bangladesh maintains a prohibitive stance on cryptocurrencies, treating them as unauthorized and risky, rather than attempting to classify them under existing securities laws. The focus remains on preventing their use in the financial system and mitigating associated risks like money laundering and capital flight.