Eritrea

**No Required Licenses:** Currently, there are no known dedicated licenses for virtual asset service providers (VASPs) such as exchanges, custody providers, or payment processors in Eritrea. This means there's no official pathway to obtain such licenses.

**De Facto Prohibition/Extreme Risk:** In the absence of specific legislation, the operation of cryptocurrency businesses would likely fall into one of the following categories:

**Unregulated and therefore illegal by default:** Any financial activity not explicitly authorized or licensed by the government or the Bank of Eritrea could be considered illegal.

**Prohibited under existing general financial laws:** Eritrea's financial sector is tightly controlled by the Bank of Eritrea and the Ministry of Finance. It's highly probable that engaging in unauthorized financial services, currency exchange, or money transmission activities (which crypto services could be broadly interpreted as) would be considered illegal under existing general financial laws.

**High Risk for Individuals and Businesses:** Even if not explicitly prohibited, operating such services would expose individuals and businesses to significant legal and operational risks, including potential seizure of assets, fines, or imprisonment.

**Neither Exists for Crypto:** Since there's no specific framework, neither a registration nor a licensing regime exists for virtual assets in Eritrea.

**Capital Requirements:** Not applicable for crypto businesses. General financial institutions would have capital requirements set by the Bank of Eritrea, but these would not extend to crypto operations.

**AML/KYC Requirements:** Eritrea is not known for having a robust or transparent AML/CFT (Anti-Money Laundering/Combating the Financing of Terrorism) framework, especially one that addresses emerging areas like virtual assets. While general AML principles might be part of its laws (e.g., related to banks), there are no specific AML/KYC requirements for crypto businesses.

**Local Presence:** Not applicable for crypto businesses. For any general business operations in Eritrea, a local presence (e.g., incorporation, local directors) is typically required and heavily scrutinized by the government.

**None for Crypto:** There is no established application process for cryptocurrency licenses in Eritrea.

*Note:* A general search for "Bank of Eritrea" might lead to a generic, often non-functional or very outdated page, or news articles about it, rather than a robust regulatory portal.

**Eritrean Ministry of Finance:** Responsible for fiscal policy and financial sector oversight. Similar to the Bank of Eritrea, public access to detailed legal texts is rare.

**FATF (Financial Action Task Force):** While FATF sets international standards for AML/CFT, including for virtual assets, Eritrea's status regarding these recommendations, particularly for virtual assets, would likely be one of non-compliance due to the lack of any framework. FATF reports may mention Eritrea's general AML/CFT regime, but they wouldn't point to specific Eritrean crypto laws.

*FATF Country Reports:* You would need to search the FATF website for any mutual evaluation reports on Eritrea, but these are often sparse for non-member jurisdictions or those with limited engagement.

**Regulatory Approach:** **De Facto Ban / Unregulated (due to prohibition by existing financial controls)**

Eritrea does not have specific, publicly available legislation explicitly banning or regulating cryptocurrencies. However, its existing strict capital controls, foreign exchange regulations, and monetary policy effectively create a **de facto ban** on any unauthorized financial activity, including the use, trading, or mining of cryptocurrencies.

The Eritrean Nakfa (ERN) is the sole legal tender, and any attempt to use or trade alternative currencies (digital or otherwise) would be considered illegal and subject to severe penalties under existing financial and foreign exchange laws.

There is no infrastructure, legal recognition, or permitted pathways for virtual asset activities in Eritrea.

**Bank of Eritrea (BoE):** As the central bank, the BoE has ultimate authority over monetary policy, banking, foreign exchange, and financial institutions in the country. Any financial activity not sanctioned by the BoE is strictly prohibited.

**Ministry of Finance:** Works in conjunction with the BoE to manage the nation's economic and financial policies.

**Key Legislation Names and Dates:**

**Specific Cryptocurrency/Virtual Asset Legislation:** There is **no known or publicly available specific legislation** in Eritrea addressing cryptocurrencies or virtual assets.

**Relevant General Financial Legislation (Implicitly Prohibitory):** While specific acts are not publicly available with URLs, the de facto ban stems from:

**Central Bank Act / Banking Law:** Governs the operations of the Bank of Eritrea and commercial banks, dictating the sole legal tender and approved financial activities.

**Foreign Exchange Control Regulations:** These are extremely strict in Eritrea, designed to prevent capital flight and maintain control over the national currency. Any unauthorized foreign exchange transactions (which would include crypto transactions) are illegal.

**Anti-Money Laundering (AML) / Counter-Financing of Terrorism (CFT) Framework:** While Eritrea is known for its limited transparency and challenges in implementing robust AML/CFT frameworks, any financial activity outside the state-controlled system would be viewed with suspicion and potentially as illicit.

*Note on URLs:* Due to the highly opaque nature of the Eritrean government and its lack of public legal archives, it is virtually impossible to provide URLs for specific, dated legislation related to banking, foreign exchange, or any financial laws, let alone those pertaining to cryptocurrencies. Information is primarily derived from reports by international bodies (IMF, World Bank, UN) that describe the country's financial controls rather than citing specific laws directly accessible to the public.

**Current Stance on Crypto Trading and Exchanges:**

**Trading:** Explicitly **prohibited by implication**. Given the strict financial and foreign exchange controls, any form of cryptocurrency trading by individuals or entities would be illegal and subject to severe penalties. There is no legal framework or authorized platform for such activities.

**Exchanges:** **Non-existent and illegal.** No virtual asset service providers (VASP) or cryptocurrency exchanges are licensed or permitted to operate in Eritrea. The establishment or operation of such an entity would be a direct violation of the country's financial regulations.

**No Eritrea-Specific UN Sanctions Program:** There are currently no UN Security Council resolutions imposing a *country-wide* asset freeze or other specific financial sanctions on Eritrea that would directly restrict cryptocurrency transactions with entities or individuals solely because they are Eritrean.

**General UN Sanctions Lists Still Apply:** Virtual Asset Service Providers (VASPs) must still comply with global UN sanctions lists, such as the **ISIL (Da'esh) and Al-Qaida Sanctions List (UNSCR 1988/1267 List)** and other designated individuals/entities under various UN resolutions. If any individual or entity in Eritrea were to be placed on such a list for reasons unrelated to Eritrea's previous country-level sanctions (e.g., terrorism financing), transactions with them would be prohibited.

**Compliance Requirements:** VASPs are expected to:

**Implement Robust KYC/AML Programs:** To identify and verify customers and monitor transactions.

**Conduct Sanctions Screening:** Screen all customers and transaction counterparties against relevant UN sanctions lists (e.g., the Consolidated Sanctions List).

**Report Suspicious Activity:** To relevant financial intelligence units (FIUs).

**Block Assets:** Immediately freeze assets of designated individuals/entities and report the blocking.

**UN Security Council Subsidiary Organs - Sanctions Lists:** https://www.un.org/securitycouncil/sanctions/information

**FATF Guidance for Virtual Assets and VASPs (June 2019, updated March 2024):** This guidance outlines the AML/CFT and sanctions compliance obligations for VASPs. https://www.fatf-gafi.org/content/fatf-gafi/en/recommendations/guidance-vasps-fatf-recommendation-15.html

The U.S. sanctions regime on Eritrea largely mirrored the UN sanctions and was also significantly scaled back or terminated following the UN's lifting of sanctions.

**No Eritrea-Specific Comprehensive Program:** U.S. persons (including VASPs operating in or accessible from the U.S., or using U.S. financial systems) are not generally prohibited from engaging in transactions with persons or entities in Eritrea *solely* because they are Eritrean.

**Targeted Sanctions Still Apply:** However, U.S. persons and VASPs must still comply with OFAC's global sanctions programs. This means:

**SDN List Screening:** All customers and transactions must be screened against OFAC's Specially Designated Nationals and Blocked Persons (SDN) List. If an individual or entity in Eritrea is designated under another OFAC program (e.g., Global Magnitsky Human Rights Accountability Act, Counter Terrorism, Counter Narcotics, Cyber-related Sanctions), transactions with them are prohibited, and their assets must be blocked.

**Sectoral Sanctions:** If any Eritrean entity were to be designated under a sectoral sanctions identification list (SSI List) in the future (though none currently exist for Eritrea), restrictions would apply.

**Other Sanctioned Jurisdictions:** U.S. persons and VASPs are prohibited from facilitating transactions that indirectly benefit or involve comprehensively sanctioned jurisdictions (e.g., Iran, North Korea, Syria, Cuba, certain regions of Ukraine), even if the direct counterparty is in Eritrea.

**Implement a Risk-Based Sanctions Compliance Program:** As advised by OFAC, this includes management commitment, risk assessment, internal controls, testing/auditing, and training.

**Conduct Enhanced Due Diligence:** For high-risk customers or transactions.

**Report Blocked Property and Rejected Transactions:** To OFAC.

**OFAC Sanctions Programs and Country Information:** https://home.treasury.gov/policy-issues/office-of-foreign-assets-control-sanctions-programs-and-information

**Search the SDN List:** https://sanctionssearch.ofac.treas.gov/

**OFAC's Framework for OFAC Compliance Commitments (May 2019):** https://home.treasury.gov/system/files/126/framework_ofac_compliance_commitments.pdf

The EU sanctions, like the UN's, were significantly reduced and effectively terminated following the UN Security Council's lifting of sanctions.

**No Eritrea-Specific Comprehensive Program:** EU persons (including VASPs incorporated or operating in the EU) are not generally prohibited from engaging in cryptocurrency transactions with persons or entities in Eritrea *solely* because they are Eritrean.

**Targeted Sanctions Still Apply:** EU persons and VASPs must still comply with the EU's global sanctions programs. This means:

**EU Consolidated Sanctions List Screening:** All customers and transactions must be screened against the EU's Consolidated List of persons, groups, and entities subject to EU financial sanctions. If an individual or entity in Eritrea is designated under another EU program (e.g., EU Global Human Rights Sanctions Regime, Counter-Terrorism), transactions with them are prohibited, and their assets must be frozen.

**Other Sanctioned Jurisdictions:** EU persons and VASPs are prohibited from facilitating transactions that indirectly benefit or involve other comprehensively sanctioned jurisdictions (e.g., Syria, Belarus, Russia), even if the direct counterparty is in Eritrea.

**Compliance Requirements:** VASPs in the EU must:

**Implement Robust AML/CFT and Sanctions Compliance Systems:** In line with EU AML Directives (e.g., 5th and 6th AMLD) and national implementing laws.

**Conduct Sanctions Screening:** Against the EU Consolidated List.

**Report Breaches and Freezing:** To competent national authorities.

**EU Financial Sanctions Map:** https://sanctionsmap.eu/

**EU Consolidated List (Council of the European Union):** https://www.consilium.europa.eu/en/policies/sanctions/consolidated-list/

**Beneficial Owners:** Identifying and screening ultimate beneficial owners.

**Originator/Beneficiary Information:** For all virtual asset transfers.

**Ongoing Monitoring:** Regularly checking existing customer bases against updated sanctions lists.

**UN Consolidated Sanctions List:** Individuals and entities designated by the UN Security Council.

**OFAC SDN List:** Individuals and entities designated by the U.S. government.

**EU Consolidated List:** Individuals and entities designated by the European Union.

**National Sanctions Lists:** Any additional lists maintained by the jurisdiction where the VASP is domiciled or operates.

**Circumvent Sanctions on Other Countries:** For example, processing a cryptocurrency transaction from Eritrea that is ultimately destined for a comprehensively sanctioned jurisdiction like North Korea or Iran, or involves an entity acting on behalf of such a jurisdiction, would be a violation.

**Involve Dual-Use Goods or Prohibited Technologies:** If cryptocurrency is used to finance or facilitate the trade of items prohibited under global export controls or sanctions regimes.

**Civil Penalties:** Can range into millions of dollars per violation, depending on the severity and nature of the breach.

**Criminal Penalties:** For willful violations, individuals can face prison sentences of up to 20 years, and corporations can face fines in the tens of millions.

**EU Member States:** Penalties are determined by national laws but are typically severe, including substantial fines and imprisonment for individuals.

**UN Sanctions:** While the UN itself does not impose direct penalties on private entities, UN member states are obligated to implement the resolutions, and their national laws provide for penalties for violations.

**Reputational Damage:** Beyond monetary and custodial penalties, violations lead to significant reputational damage, loss of licenses, and exclusion from the financial system.

Screen Eritrean individuals and entities against global (UN, OFAC, EU) targeted sanctions lists.

Ensure that transactions involving Eritrea do not directly or indirectly benefit or involve comprehensively sanctioned jurisdictions.

Comply with general AML/CFT regulations that apply to all virtual asset transactions globally.