Crypto-funded debit card in Cabo Verde

Banco de Cabo Verde (BCV) Stance:

The Banco de Cabo Verde (BCV), the central bank, has repeatedly issued public warnings regarding the risks associated with cryptocurrencies.

It has clarified that cryptocurrencies are not legal tender in Cabo Verde.

The BCV has stated it does not authorize, supervise, or license entities that deal exclusively with virtual assets, but it has actively issued public warnings and interventions (e.g., regarding OPTCOIN), indicating some regulatory oversight through public communications and evolving legal frameworks for digital currency.

Lack of Dedicated Licensing Regime:

There are no specific laws or regulations that define a licensing framework for crypto exchanges, custody providers, or payment processors as distinct categories of financial institutions.

Neither a specific licensing nor a dedicated registration regime for Virtual Asset Service Providers (VASPs) exists in Cabo Verde.

If a company were to deal with fiat currency in a way that constitutes a traditional financial service (e.g., remittances, payment processing of traditional money), then those specific activities would fall under the BCV's existing licensing requirements for financial institutions, which are separate from crypto activities.

Cabo Verde has updated its AML/CFT laws to align with FATF recommendations, which include virtual assets and VASPs.

Key Law: Lei n.º 1/IX/2021, de 16 de março, on the Prevention and Combat of Money Laundering and the Financing of Terrorism, explicitly defines "Ativo Virtual" (Virtual Asset) and "Prestador de Serviços de Ativos Virtuais" (Virtual Asset Service Provider) and subjects them to AML/CFT obligations.

Specific AML/CFT Requirements for VASPs (as "Reporting Entities"):

Customer Due Diligence (CDD/KYC): Implementing robust KYC procedures to identify and verify the identity of customers, including beneficial owners. This means collecting name, address, date of birth, national ID, etc.

Enhanced Due Diligence (EDD): For higher-risk customers or transactions.

Record-Keeping: Maintaining records of customer identification data and transaction details for a specified period (typically 5-7 years).

Suspicious Transaction Reporting (STR): Reporting any suspicious transactions or activities to the UIF without delay.

Risk Assessments: Conducting a thorough assessment of money laundering and terrorist financing risks associated with their business operations, customers, products, and services.

Internal Controls: Establishing and maintaining appropriate internal policies, procedures, and controls to mitigate ML/TF risks, including the appointment of an AML compliance officer and staff training.

Unidade de Informação Financeira (UIF) – Financial Intelligence Unit:

Retention Period: Records must be retained for at least five (5) years after the business relationship ends or after the date of an occasional transaction. These records must be readily available to competent authorities upon request.

Reporting Obligation: Immediately report any transaction (or attempted transaction), regardless of the amount, that the VASP suspects to be related to money laundering, terrorist financing, or proliferation financing.

Enhanced Due Diligence (EDD): Required for higher-risk customers or transactions, including:

No Explicit Classification: There is no specific law classifying stablecoins as e-money, payment tokens, or securities.

Potential E-money Classification by Analogy: If a stablecoin is pegged to the Cabo Verde Escudo (CVE) or another fiat currency, is issued against receipt of funds, and is accepted as a means of payment by parties other than the issuer, it could potentially be categorized as "electronic money" under existing legislation.

Legal Reference: Lei n.º 137/VIII/2015, de 31 de Dezembro (Regime Jurídico das Instituições de Moeda Electrónica) – This law establishes the legal framework for Electronic Money Institutions (EMIs).

If classified as E-money: Institutions issuing e-money under Lei n.º 137/VIII/2015 are subject to strict reserve requirements. They must safeguard funds received in exchange for electronic money by holding them in a separate account in a credit institution or investing them in secure, low-risk assets.

If classified as E-money: Any entity intending to issue stablecoins that are deemed electronic money would need to obtain a license as an Electronic Money Institution (EMI) from the Banco de Cabo Verde (BCV). This involves meeting stringent capital, governance, operational, and anti-money laundering requirements.

Legal Reference: Lei n.º 9/IX/2018, de 25 de Maio (Lei dos Serviços de Pagamento) – This law governs payment services.

Potential Payment Service: Operations involving stablecoins as a means of transfer might also fall under the scope of general payment service provider regulations.

Primary Regulator: The Banco de Cabo Verde (BCV) is the central bank and the main authority responsible for overseeing financial institutions and monetary policy. It is also the most likely body to address issues related to virtual assets and cryptocurrencies from a financial stability and consumer protection perspective.

Regulatory Stance and Warnings (General "Actions"):

Issuing warnings to the public about the risks of unregulated virtual assets.