Cabo Verde -- Custody Regulations Regulatory Overview

As of my last update, Cabo Verde does not have a comprehensive, dedicated regulatory framework specifically for cryptocurrency and digital asset custody. Like many developing nations, its approach to digital assets is still evolving, and existing financial laws may be interpreted to apply, or new legislation may be in various stages of consideration.

The primary financial regulator in Cabo Verde is the Banco de Cabo Verde (BCV). Their focus has historically been on traditional financial services, banking, and payment systems.

Here's a breakdown of the likely situation regarding your specific questions:

1. Custodial License Requirements:

   • No specific "crypto custody license" currently exists.
   • However, any entity providing services that involve holding or managing financial assets, even digital ones, could potentially be deemed to be operating within the scope of existing financial services laws and regulations. This might necessitate obtaining a general financial services license or authorization from the Banco de Cabo Verde (BCV) if their activities are interpreted to fall under the definition of banking, investment services, or payment services.
   • Entities offering services involving fiat currency exchange or payment processing related to digital assets would likely fall under existing payment services regulations.

2. Segregation of Client Assets Rules:

   • While there are no specific crypto-custody segregation rules, the general principles of financial prudency and client protection applicable to traditional financial institutions in Cabo Verde would likely require segregation of client funds/assets from the operational capital of the service provider. This is a fundamental principle to prevent misuse of client assets and protect them in case of insolvency.
   • References would be found in the general banking and financial system laws and prudential regulations issued by the BCV.

3. Insurance/Bonding Requirements:

   • No specific insurance or bonding requirements for crypto custody.
   • General financial institutions in Cabo Verde are subject to capital adequacy requirements set by the BCV to ensure their financial stability. These requirements are not specific to digital assets but are designed to provide a buffer against financial risks.
   • It's unlikely that dedicated insurance for crypto asset loss (e.g., from cyberattacks or theft) is mandated without a specific regulatory framework for crypto custody.

4. Cold Storage Mandates:

   • There are no specific mandates for cold storage of digital assets.
   • Such technical requirements are typically found in highly developed, dedicated crypto regulatory frameworks. Without specific legislation, the operational security measures (including hot/cold storage) would be left to the discretion of the service provider, guided by general best practices in the crypto industry.

5. Qualified Custodian Definitions:

   • No specific definition of a "qualified crypto custodian."
   • In the absence of dedicated crypto regulations, if digital assets were to be treated akin to other financial instruments, a "qualified custodian" would likely refer to an entity already licensed and regulated by the BCV as a bank, trust company, or investment firm authorized to hold client assets.

6. Pending Custody Legislation:

   • While there have been discussions and explorations by the Cabo Verdean government and the BCV regarding blockchain technology and digital currencies (including the possibility of a central bank digital currency), there is no publicly available, comprehensive draft legislation specifically addressing digital asset custody.
   • The most likely initial regulatory step would be the inclusion of Virtual Asset Service Providers (VASPs) within the scope of the country's Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) framework, aligning with recommendations from the Financial Action Task Force (FATF). This would impose registration, KYC/CDD, transaction monitoring, and reporting obligations on entities dealing with virtual assets.

Relevant Regulatory References and URLs:

Given the lack of specific crypto custody regulations, you would need to refer to the general financial legislation and the website of the Banco de Cabo Verde:

• Banco de Cabo Verde (BCV) - Official Website: This is the central source for all financial regulations in Cabo Verde. You would need to consult the laws and regulations related to banking, financial institutions, and payment services.

  • URL: https://www.bcv.cv/

• AML/CFT Legislation: Cabo Verde has a national framework for Anti-Money Laundering and Combating the Financing of Terrorism. While the primary law might not explicitly mention "virtual assets" in older versions, newer amendments or interpretations might bring VASPs under its purview.

  • An example of a general AML law (you'd need to verify the most current and its scope):
    • Lei nº 36/IX/2019 de 21 de Novembro (Lei sobre Prevenção e Combate ao Branqueamento de Capitais e Financiamento do Terrorismo) - You would need to find the official publication of this law, likely on the BCV website or the national legislative database, and review its scope regarding "virtual assets" or "new financial technologies." A direct URL to the law's text is usually embedded within government legislative portals rather than a general regulator's site.

Important Note: The regulatory landscape for digital assets is rapidly evolving globally. It is crucial to consult directly with legal professionals specializing in Cabo Verdean financial law for the most current and accurate information, especially before making any operational or investment decisions. Information can become outdated quickly.