Egypt -- Licensing Requirements Regulatory Overview

**Article 206** of Law No. 194 of 2020 prohibits the issuance or trading of cryptocurrencies, or the establishment or operation of platforms for their trading, or conducting any related activities, without a license from the Board of Directors of the Central Bank.

Given that the CBE has not issued any such licenses, and has reiterated its warnings, this effectively means that the activities typically performed by VASPs (exchanges, custodians, etc.) are **prohibited** in Egypt.

**Law No. 80 of 2002 (Anti-Money Laundering Law), as amended:** This is the primary AML/CFT legislation in Egypt.

**Prime Minister's Decree No. 164 of 2020 (Executive Regulations of Law No. 80/2002):** Provides detailed rules for the implementation of the AML Law.

**Identification and Verification:** Identifying the customer and verifying their identity using reliable, independent source documents, data, or information. This includes individuals, legal persons, and legal arrangements.

**Beneficial Ownership:** Identifying the beneficial owner(s) of the customer and taking reasonable measures to verify their identity.

**Purpose and Nature of Business:** Understanding the purpose and intended nature of the business relationship or transaction.

**Ongoing Monitoring:** Conducting ongoing due diligence on the business relationship and scrutinizing transactions undertaken throughout the course of that relationship to ensure that the transactions are consistent with the financial institution's knowledge of the customer, their business, and risk profile.

**Risk-Based Approach (RBA):** Applying CDD measures based on a risk assessment. Activities involving virtual assets would inherently be considered **high-risk**, necessitating **Enhanced Due Diligence (EDD)**, which would include:

Obtaining additional information on the customer and beneficial owner.

Obtaining additional information on the intended nature of the business relationship.

Obtaining information on the source of funds or source of wealth of the customer.

Obtaining information on the reasons for the intended or performed transactions.

Obtaining the approval of senior management for establishing or continuing the business relationship.

Conducting enhanced ongoing monitoring of the business relationship.

**Obligation to Report:** Any transaction, regardless of amount, where there are reasonable grounds to suspect that it involves proceeds of crime or is linked to terrorist financing, must be reported without delay.

**No Tipping-Off:** Financial institutions and their employees are prohibited from disclosing to the customer or any third party that an STR has been filed or that an investigation is underway.

**Customer Identification Data:** All documents, data, and information used for identification and verification.

**Transaction Records:** All details of domestic and international transactions, including the nature, amount, currency, and parties involved.

**Business Correspondence:** Records of business correspondence relating to the customer relationship.

The Central Bank of Egypt (CBE) is an active regulator that recently held key interest rates unchanged on May 21, 2026, reported net international reserves of $53.01 billion by end of April 2026, and conducted an EGP 1 billion three-year sukuk auction on May 5, 2026.

The CBE is responsible for licensing, regulating, and supervising banks and payment service providers, and ensures their compliance with AML/CFT regulations. As virtual assets fall under their purview according to Law No. 194 of 2020, they are the key regulator.

**Egyptian Money Laundering and Terrorist Financing Combating Unit (EMLCU/EMLCFTU):**

The EMLCU is Egypt's Financial Intelligence Unit (FIU) and is responsible for receiving, analyzing, and disseminating STRs to relevant law enforcement authorities. While operationally independent, it often works closely with the CBE.

"Information about the EMLCU is available through dedicated government portals; however, direct access to the EMLCU website may require searching the Arabic portal."

**Central Bank and Banking Sector Law No. 194 of 2020, Article 206**

**Central Bank of Egypt (CBE) Official Website:** https://www.cbe.org.eg/ (While not linking to the specific article, this is the main authority).

For private cryptocurrencies: No specific custodial license framework exists. Instead, **Article 206 of Law No. 194 of 2020** broadly prohibits activities related to cryptocurrencies, including trading and potentially custody, without a CBE license. Since no such licenses have been issued for private crypto activities, operating a crypto custody service for private cryptocurrencies would likely be considered illegal.

For a potential future Central Bank Digital Currency (CBDC): If Egypt were to issue a CBDC, its custody would fall under the CBE's purview and existing banking laws, likely managed by the CBE itself or licensed commercial banks.

**Segregation of Client Assets Rules:**

**Non-existent for private crypto custody:** As there is no legal framework permitting private crypto custody services, there are no specific rules regarding the segregation of client assets for such services.

**General banking principles (applicable if licensed entities were to hold digital assets):** In the traditional banking sector, client funds are strictly segregated from institutional assets. If a licensed entity were to hold digital assets (e.g., a CBDC), these traditional principles of segregation would likely apply, derived from the Central Bank and Banking Sector Law and related CBE regulations.

**Non-existent for private crypto custody:** Due to the prohibitory nature of the existing laws, there are no specific insurance or bonding requirements for cryptocurrency custody.

**General financial institution requirements:** Licensed financial institutions in Egypt are subject to capital adequacy requirements and, in the case of banks, participate in the Deposit Insurance Fund. However, these do not specifically extend to covering private cryptocurrency holdings.

**Non-existent:** There are no specific mandates or regulations in Egypt requiring crypto custodians (which are not legally recognized for private crypto) to utilize cold storage for digital assets.

**Non-existent for private crypto custody:** Egyptian law does not define "qualified custodian" in the context of cryptocurrencies.

**Financial Regulatory Authority (FRA) Official Website:** https://fra.gov.eg/ (Regulates non-banking financial markets, but does not currently regulate private crypto custody).

As of the latest information, there is **no specific pending legislation** in Egypt that would establish a framework for cryptocurrency custody services for private digital assets.

The Egyptian government and CBE have, however, expressed interest in exploring the potential for a **Central Bank Digital Currency (CBDC)**. Any such initiative would likely involve the CBE establishing its own custody rules for that specific digital currency, rather than regulating private crypto custodians.

Egypt is a member of the Financial Action Task Force (FATF), and the FATF Recommendations (specifically Recommendation 15 and its Interpretive Note) call for countries to regulate Virtual Asset Service Providers (VASPs), which include custodians. While Egypt has taken steps to enhance its AML/CFT framework, its current approach to private cryptocurrencies largely bypasses directly regulating VASPs by prohibiting many of their activities. Future pressure from FATF could potentially lead to a re-evaluation, but no specific custody legislation is currently on the horizon.

**General Cryptocurrencies (e.g., Bitcoin, Ethereum):** Regulated primarily by the Central Bank of Egypt (CBE). The stance here is highly restrictive.

**Digital Assets as Financial Instruments (e.g., tokenized securities, NFTs as investment products):** Regulated by the Financial Regulatory Authority (FRA) under specific conditions. This is a more recent and developing area.

**For General Cryptocurrencies (CBE):** The regime is largely **prohibitory** unless explicitly licensed by the CBE. Given no such licenses have been publicly issued for general crypto exchanges, it effectively acts as a prohibition for most entities.

**For Digital Assets as Financial Instruments (FRA):** This is a **licensing regime** for specific activities related to capital markets and non-banking financial services.

**Legal Basis:** Article 206 of Law No. 194 of 2020 (the Central Bank and Banking Sector Law) explicitly states: "It is prohibited to issue cryptocurrencies or trade them, or promote them, or establish or operate platforms for their trading, or to carry out activities related to them without obtaining a license from the Board of Directors of the Central Bank in accordance with the rules and conditions determined by it."

**Exchanges:** While the law allows for a license, the CBE has not, to date, issued any licenses for public-facing cryptocurrency exchanges that facilitate the trading of general cryptocurrencies. The CBE has consistently warned against dealing in such assets, citing risks like money laundering, terrorism financing, and price volatility. Therefore, establishing a general crypto exchange is **de facto prohibited.**

**Custody Providers:** Similarly, providing custody services for general cryptocurrencies would fall under the prohibition as it is an "activity related to them" without a CBE license.

Using *blockchain technology* for cross-border remittances or internal payment systems by licensed banks or payment service providers might be permissible *if approved by the CBE*, but this is distinct from processing payments *in* general cryptocurrencies like BTC or ETH for commercial transactions.

Any entity offering payment services (even if blockchain-based) must obtain a **Payment Service Provider (PSP) license** from the CBE, which comes with stringent requirements. Using general cryptocurrencies as a payment method would likely still fall under the general prohibition unless specific approval is given, which is rare.

**Legal Basis:** The FRA issued Decree No. 171 of 2023 "Regarding the Rules for the Establishment and Licensing of Companies to Practice Non-Banking Financial Activities Using Digital Technology." This framework focuses on digital assets that qualify as **financial instruments** (e.g., tokenized securities, tokenized bonds, NFTs representing fractional ownership in real assets or funds).

**Exchanges/Platforms for Digital Financial Instruments:** Entities wishing to operate a platform for trading these *digital financial instruments* (e.g., a digital stock exchange for tokenized securities) would need to obtain a specific license from the FRA, adhering to the requirements of Decree 171 and relevant capital market laws.

**Custody Providers for Digital Financial Instruments:** Companies providing custody for these specific digital financial instruments would also need to be licensed by the FRA as a custodian for financial assets, demonstrating robust security, insurance, and technological infrastructure.

**Payment Processors:** This framework is less about payment processing in the traditional sense and more about facilitating capital market activities using digital assets.

**Capital Requirements:** Very high, commensurate with financial stability and risk exposure.

**AML/KYC:** Strict adherence to Egypt's Anti-Money Laundering Law No. 80 of 2002 and its executive regulations, FATF recommendations, and local CBE guidelines. This would include robust customer due diligence, transaction monitoring, and suspicious activity reporting.

**Local Presence:** Mandatory establishment of a local entity (e.g., a joint-stock company) in Egypt, with a physical office and local management.

**Technology & Security:** Advanced IT infrastructure, cybersecurity measures, data protection, and resilience plans.

**Consumer Protection:** Mechanisms for dispute resolution, transparent fee structures, and clear risk disclosures.

**Fit and Proper Test:** For shareholders, directors, and senior management.

**Capital Requirements:** Specific minimum capital requirements will be set by the FRA based on the type of activity. These will be substantial, aligning with other licensed financial service providers in the capital markets.

**AML/KYC:** Full compliance with Egyptian AML laws and FRA regulations. Companies must have robust AML/CTF policies, procedures, and systems.

**Local Presence:** The entity must be legally incorporated and headquartered in Egypt.

**Technology & Security:** Demonstrable capacity for secure digital asset management, robust cybersecurity protocols, data privacy compliance, and IT audit readiness.

**Corporate Governance:** Clear ownership structure, independent board members, risk management, internal controls, and audit functions.

**Qualified Personnel:** Experienced and qualified staff in financial services, technology, and compliance.

**Business Plan:** A detailed business plan outlining operations, risk management, and financial projections.

**Initial Inquiry/Consultation:** Engaging with the CBE.

**Comprehensive Application Submission:** Detailed business plan, legal structure, financial projections, compliance frameworks (AML/KYC), IT security architecture, management profiles, and corporate governance documents.

**Due Diligence & Review:** CBE's extensive review of all submitted documents and the background of key personnel.

**On-site Inspections:** Potential inspections of premises and systems.

**Final Approval & License Issuance:** If all conditions are met, which is highly unlikely for general crypto in the current climate.

**Pre-application Meeting:** Initial discussions with the FRA to understand the specific requirements for the proposed activity.

**Application Submission:** Filing a formal application including:

Detailed operational manual, risk management framework, AML/CTF policies.

CVs and declarations of fitness and propriety for management and key personnel.

Technology audit reports and cybersecurity plans.

**Review and Clarifications:** The FRA will review the application, request additional information, and conduct interviews.

**Approval in Principle:** Granting of a preliminary approval.

**Fulfillment of Conditions:** The applicant must meet any remaining conditions (e.g., hiring specific personnel, setting up systems).

**Final License Issuance:** Upon successful completion of all conditions.

**Central Bank and Banking Sector Law (Law No. 194 of 2020):**

This is the primary law governing banking and payment systems in Egypt, including the prohibition on unlicensed crypto.

*Reference:* Al-Jarida Al-Rasmiya (Official Gazette of Egypt) Issue No. 34 (A), dated 20 August 2020.

*URL (Official Gazette, Arabic):* While a direct English link to the full text isn't available, the Arabic version is published here: https://www.eg.gov.eg/legal.aspx (You would need to navigate to the specific issue).

*Legal Analysis (Example Source - Deloitte):* Many legal firms provide summaries: https://www2.deloitte.com/content/dam/Deloitte/xe/Documents/legal/mena-legal-review/me_legal-review_banking-law_no-194.pdf

**Financial Regulatory Authority (FRA) Decree No. 171 of 2023:**

"Regarding the Rules for the Establishment and Licensing of Companies to Practice Non-Banking Financial Activities Using Digital Technology."

*Reference:* The FRA website usually publishes its decrees.

*URL (FRA Website - Arabic, look for news/decrees):* https://fra.gov.eg/

*Legal News/Analysis (Example Source):* Many Egyptian and international legal news outlets covered this decree upon its release. Searching for "FRA Decree 171 2023 Egypt" will yield relevant articles.

**Anti-Money Laundering Law No. 80 of 2002 (and its Executive Regulations):**

This law, along with subsequent amendments and executive regulations, forms the basis for AML/CTF compliance in Egypt.

*URL (Egypt's Money Laundering Combatting Unit - MLCU, Arabic):* https://www.mlcu.gov.eg/ (You would need to navigate to the laws section).

**CBE Law No. 194 of 2020 (Central Bank and Banking Sector Law):**

**Article 206** explicitly prohibits the issuance, trading, or promotion of cryptocurrencies and other virtual assets, or establishing and operating platforms for their trading, without a license from the CBE. As of now, the CBE has not issued any licenses for these activities.

*Example analysis (not direct law link):* Baker McKenzie on Egypt's Banking Law 2020 (search for virtual assets/crypto sections).

**Penalties:** Violations of Article 206 carry severe penalties, including imprisonment and substantial fines.

**Implication:** This law effectively bans most cryptocurrency activities within Egypt. Therefore, the concept of an "Egyptian VASP" operating legally and needing to comply with sanctions is not currently applicable. Any crypto activity is, by default, illegal under Egyptian law, making sanctions compliance secondary to the primary violation.

**Obligation:** As a member state of the United Nations, Egypt is obligated to implement UN Security Council (UNSC) resolutions imposing targeted financial sanctions, particularly those related to terrorism financing and proliferation financing (TF/PF).

**Mechanism:** Egypt's Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) framework is the primary mechanism for implementing UN sanctions. The **Egyptian Money Laundering and Terrorist Financing Combating Unit (EMLFCU)** is the financial intelligence unit responsible for receiving suspicious transaction reports and enforcing AML/CTF regulations, which include sanctions compliance.

**Requirements:** Any financial institution in Egypt (even if crypto were legal) would be required to:

Screen customers and transactions against the **UN Consolidated Sanctions List**.

Freeze assets of designated individuals and entities without delay.

**Legal Reference:** Egypt's **Anti-Money Laundering Law No. 80 of 2002**, as amended, and its executive regulations, mandate compliance with international obligations, including UN Security Council resolutions on targeted financial sanctions.

**Jurisdiction:** OFAC sanctions apply extraterritorially to:

U.S. persons globally (U.S. citizens, permanent residents, entities organized under U.S. law, and anyone within the U.S.).

Transactions that touch the U.S. financial system or involve U.S. origin goods/services.

Foreign entities that facilitate significant transactions for or on behalf of designated persons (secondary sanctions).

Foreign VASPs serving Egyptian customers, especially if they have any U.S. nexus or deal with U.S. dollar-denominated assets, must comply with OFAC regulations.

**Sanctioned Entity Screening:** Screening all users (including Egyptian users) against the **Specially Designated Nationals and Blocked Persons (SDN) List** and other OFAC sanctions lists.

**Geographic Restrictions:** Prohibiting services to individuals/entities in comprehensively sanctioned jurisdictions (e.g., Iran, North Korea, Cuba, Syria, Crimea region).

**Transaction Monitoring:** Monitoring crypto transactions for patterns indicative of sanctions evasion or involvement with sanctioned parties.

**IP Blocking:** Implementing IP address blocking for sanctioned jurisdictions.

**Penalties for Violations:** Severe civil and criminal penalties, including massive fines (millions to billions of USD) and imprisonment.

OFAC Sanctions Programs and Information

OFAC Guidance for the Virtual Currency Industry (October 2020)

**Jurisdiction:** EU sanctions apply to:

EU nationals and entities globally.

Any business conducted in whole or in part within the territory of the EU.

Transactions that involve EU financial institutions or assets.

Foreign VASPs serving Egyptian customers, particularly if they have an EU presence or deal with euro-denominated assets, must comply with EU sanctions.

**Sanctioned Entity Screening:** Screening against the **EU Consolidated List of Sanctions**.

**Geographic Restrictions:** Implementing restrictions on dealings with individuals/entities in EU-sanctioned jurisdictions.

Penalties for Violations: Member states enforce penalties, which vary but can include substantial fines and imprisonment.

European Commission - Restrictive Measures (Sanctions)

**For entities operating legally within Egypt (e.g., traditional banks):** Must screen customers and transactions against the UN Consolidated Sanctions List as part of their AML/CTF obligations.

**For foreign VASPs dealing with Egyptian customers:** Must screen against OFAC SDN List, EU Consolidated List, and UN Consolidated Sanctions List, in addition to their regular KYC/AML checks.

**Egypt (Domestic):** As per CBE Law 194/2020, there's an effective geographic restriction on *any* cryptocurrency activity within Egypt without a license.

**International Sanctions:** Foreign VASPs must implement geographic restrictions based on their jurisdictional obligations. This means prohibiting services to users identified as being from or linked to comprehensively sanctioned countries (e.g., Iran, North Korea, Syria, Cuba, Crimea region, etc.) as designated by OFAC, EU, and UN.

**Under Egyptian Law (CBE Law 194/2020):**

For engaging in illegal crypto activities: Imprisonment and substantial financial penalties. Specific amounts are subject to the law's exact wording and judicial discretion, but can be in the millions of Egyptian Pounds.

Civil penalties: Can range from thousands to hundreds of millions of USD per violation, depending on the severity, knowledge, and cooperation.

Criminal penalties: Up to 20 years imprisonment and fines of up to $1 million for individuals, and up to $20 million for corporations.

Penalties are determined by individual EU member states but can include significant fines and imprisonment.

**No Specific Crypto Sanctions List:** Egypt does not maintain a specific domestic sanctions list dedicated to cryptocurrencies, nor does it have a broad, publicly published domestic sanctions list akin to the OFAC SDN list for general financial crimes.

**UN Sanctions Implementation:** Egypt primarily implements the UN Security Council Sanctions List for targeted financial sanctions related to terrorism and proliferation financing. These lists do not specifically distinguish between traditional and crypto assets but aim to freeze all assets of designated individuals and entities.

**Domestic Terrorist Lists:** While Egypt may designate individuals or entities as terrorists under its domestic anti-terrorism laws, these are typically related to national security concerns and would feed into broader asset freezing directives, not a distinct "sanctions list" for crypto in the international sense. These lists are not typically publicly consolidated and shared like international sanctions lists.

**Lack of Specific Classification:** Egyptian law, particularly Law No. 194 of 2020, does not specifically classify stablecoins as e-money, payment tokens, or securities. Instead, they are treated broadly under the umbrella of "cryptocurrencies" or "virtual currencies."

**De Facto Prohibition:** Article 206 of the CBE Law prohibits the issuance, trading, or promotion of cryptocurrencies without a license from the Central Bank of Egypt. As no such licenses have been granted for stablecoins or other cryptocurrencies, they are effectively prohibited.

**Not Legal Tender:** The CBE has repeatedly clarified that cryptocurrencies, including stablecoins, are not recognized as legal tender in Egypt and are not issued or guaranteed by any official authority.

Given that stablecoins are not licensed or recognized under a specific regulatory framework, there are no specific reserve requirements mandated by Egyptian regulators for stablecoin issuers.

Any hypothetical future licensing framework would likely impose stringent capital and reserve requirements, similar to those for licensed payment service providers or banks, to ensure stability and consumer protection.

**Law No. 194 of 2020, Article 206:** This is the critical provision. It states: "It is prohibited to issue cryptocurrencies or trade or promote them or establish or operate platforms for their exchange, or perform activities related to them without obtaining a license from the Board of Directors of the Central Bank in accordance with the rules and procedures specified by the Board."

**Practical Reality:** As of current public knowledge, the CBE has not issued any such licenses for stablecoin issuers (or any other cryptocurrency issuers). The CBE's consistent stance has been one of extreme caution and warnings against dealing with cryptocurrencies due to risks of volatility, fraud, and illicit activities. Obtaining such a license for a private stablecoin issuer appears highly unlikely under the current policy direction.

Since stablecoins are not licensed or regulated by the CBE, there are no legally enforceable redemption rights guaranteed by Egyptian law.

Any terms of redemption would be solely at the discretion of the (likely foreign and unlicensed in Egypt) issuer, with no local regulatory recourse for users in Egypt if issues arise.

There are no specific rules or regulations for algorithmic stablecoins. These would fall under the general prohibition outlined in Article 206 of Law No. 194 of 2020. Given their inherent volatility and complexity, they would likely face even greater scrutiny and opposition from regulators compared to fiat-backed stablecoins.

**CBE's CBDC Exploration:** The Central Bank of Egypt has expressed interest in and is exploring the possibility of issuing its own Central Bank Digital Currency (CBDC). In 2021, CBE Governor Tarek Amer announced that Egypt was conducting feasibility studies for a CBDC, potentially leveraging distributed ledger technologies.

**Implications for Private Stablecoins:** The development of an Egyptian CBDC would likely reinforce the CBE's control over digital currency issuance and further diminish the chances for private stablecoins to gain regulatory approval or widespread adoption. A sovereign CBDC would be a state-backed digital form of the Egyptian Pound, serving as legal tender, thereby fulfilling potential demand for digital currencies in a regulated, secure, and government-controlled manner, and potentially negating any perceived need for private stablecoins.

**Law No. 194 of 2020 regarding the Central Bank and Banking System Law (CBE Law):**

**Text (Translated Excerpt):** "It is prohibited to issue cryptocurrencies or trade or promote them or establish or operate platforms for their exchange, or perform activities related to them without obtaining a license from the Board of Directors of the Central Bank in accordance with the rules and procedures specified by the Board."

**URL (Arabic official gazette reference - direct online public access to the full text can be challenging for Egyptian laws, but legal databases and reputable news sites cover it):** You would typically find this in the official gazette (Al-Jarida al-Rasmiya). For practical access, legal news sites or firms often summarize it:

**Example (Summary from a legal firm):** https://www.tamimi.com/law-update-articles/egypt-new-banking-law-no-194-of-2020/ (This provides a good overview of the law, including Article 206 context, though not the full official text).

**Central Bank of Egypt (CBE) Statements:**

The CBE has consistently issued warnings against dealing with cryptocurrencies. These statements are typically published on their official website (www.cbe.org.eg) in their press releases or news sections, although direct links to older specific warnings can be ephemeral.

**General Stance:** The CBE views cryptocurrencies as high-risk, speculative assets with no legal status, consumer protection, or regulatory oversight within Egypt.

While not a legal regulation, Dar al-Ifta (Egypt's official Islamic advisory body) issued a religious edict (fatwa) in 2018 deeming cryptocurrency trading impermissible under Islamic law, citing risks of uncertainty (Gharar), speculation, and potential for fraud. This influences policy and public perception.

**Reference:** News reports from 2018 would cover this, e.g., via Reuters or local Egyptian news outlets.