Ethiopia

**Public Prohibitions and Warnings:** The NBE consistently reminds the public that crypto is illegal.

**Criminal Enforcement:** Individuals found engaging in illegal activities (like illicit foreign exchange or money laundering) where crypto is used as a medium might face criminal prosecution under existing laws, rather than a specific "cryptocurrency enforcement action" by a financial regulator. These are typically handled by law enforcement and the justice system, not the NBE issuing administrative fines to a crypto company.

**Regulator Name:** National Bank of Ethiopia (NBE)

**Entity Targeted:** The general public, financial institutions, and anyone engaging with or promoting cryptocurrencies within Ethiopia.

**Violation Type:** Engaging in transactions with, holding, or promoting cryptocurrencies, as they are not legal tender and are explicitly prohibited.

**Penalty Amount:** Not applicable to a general warning. For individuals, criminal penalties related to illicit financial transactions, foreign exchange violations, or fraud could apply (not specified by NBE in these warnings).

**Date:** Ongoing, with several key public statements. For example, a significant warning was issued in **June 2022**, and reiterated since.

**Outcome:** Cryptocurrencies remain illegal in Ethiopia. The NBE continues to monitor and warn against their use. Financial institutions are prohibited from facilitating crypto transactions.

**National Bank of Ethiopia (NBE) Statement (June 2022) - Via Fana Broadcasting Corporate:**

This widely reported statement reiterated that "cryptocurrencies are illegal, not recognized as legal tender."

*While the direct NBE press release link is often ephemeral, reputable Ethiopian news sources reported it extensively:*

Fana Broadcasting Corporate (FBC) article reporting NBE's warning (June 2022)

Ethiopian Monitor article reporting NBE's warning (June 2022)

**Further Clarifications and Reinforcement (Ongoing):** The NBE has consistently held this position. While specific new "enforcement actions" are not announced, the continuous prohibition serves as the regulatory framework. For instance, the NBE's stance often comes up in discussions about digital currency and fintech.

Lack of regulatory oversight and consumer protection.

Potential for illicit financial activities (money laundering, terrorism financing).

Impact on foreign exchange reserves and capital controls.

**Cryptocurrency Exchanges:** No licenses are available, as trading cryptocurrencies is generally prohibited.

**Cryptocurrency Custody Providers:** No licenses are available, as holding or managing cryptocurrencies for third parties is not recognized or permitted.

**Cryptocurrency Payment Processors:** No licenses are available. While the NBE does license payment instrument issuers and payment system operators for traditional fiat-based digital payments (like mobile money services), these licenses explicitly exclude virtual assets.

**Capital Requirements:** Significant minimum capital requirements to ensure financial stability and protect consumers.

**AML/KYC (Anti-Money Laundering/Know Your Customer):** Strict AML/KYC obligations, aligning with international standards set by the Financial Action Task Force (FATF), to prevent illicit finance. This would involve robust identity verification, transaction monitoring, and suspicious activity reporting.

**Local Presence:** A requirement for a locally incorporated entity with physical presence and local management/staff.

**Cybersecurity and Data Protection:** Strong requirements for protecting customer data and securing platforms against cyber threats.

**Consumer Protection:** Measures to protect users from fraud, manipulation, and operational failures.

**National Bank of Ethiopia (NBE) Official Website:** This is the primary source for all financial regulations and official statements. While a specific "Cryptocurrency Licensing Directive" does not exist, general financial directives and public advisories can be found here.

**Public Warnings and Statements from the NBE:**

The NBE has, on multiple occasions, issued warnings against the use and trading of cryptocurrencies. For instance, in **May 2022** and again in **August 2023**, the NBE publicly warned citizens that cryptocurrencies are illegal in Ethiopia and are not recognized as a medium of exchange. They reiterated that "any transaction carried out using virtual currency is illegal" and advised against engaging in such activities due to associated risks including money laundering, terrorism financing, and consumer fraud.

**Payment Systems Directives (Contextual):** While these don't apply to crypto, they illustrate the NBE's approach to digital payments generally. The NBE issues various directives governing payment instrument issuers and payment system operators, which are exclusively for fiat-based transactions. These directives implicitly exclude cryptocurrencies by not recognizing them.

For example: **Payment Instruments Issuance Directive No. ONPS/02/2020** (or similar subsequent directives) regulates mobile money and other digital payment services. These *do not* extend to virtual assets.

Extensive research and pilot programs.

Development of a comprehensive legal and regulatory framework.

**Not Legal Tender:** Cryptocurrencies are explicitly not recognized as legal tender in Ethiopia.

**NBE Public Notice on Virtual Currencies (June 11, 2022):** The NBE issued a stern warning to the public against the use, trading, or mining of cryptocurrencies.

Cryptocurrencies are deemed illegal for transactions within Ethiopia.

The NBE highlights concerns regarding money laundering, terrorism financing, lack of consumer protection, and volatility.

It explicitly states that "any transaction carried out using such parallel markets (cryptocurrencies) is illegal."

It warns of "legal measures" against those involved in such activities.

National Bank of Ethiopia Public Notice on Virtual Currencies (June 11, 2022). While an official government portal for this specific notice isn't consistently available in English, it was widely reported by NBE's official channels and media:

*Example News Source Reporting NBE's Statement:* https://www.fanabc.com/english/nbe-warns-public-against-using-cryptocurrencies/ (Fanabc.com is an Ethiopian state media outlet)

**Payment Systems Proclamation No. 1282/2022:** This proclamation defines "payment instrument" as "any instrument or means, whether tangible or intangible, enabling the transfer of monetary value." It also defines "payment system" and "payment service." Crucially, it does not include virtual assets or cryptocurrencies among the recognized or permitted payment instruments or systems. This legislative framework solidifies the NBE's stance against crypto use for payments.

Payment Systems Proclamation No. 1282/2022. (Official text might require access to Ethiopian legal gazettes; typically available through the NBE or Ministry of Justice but not always publicly online in English readily).

The NBE's directives and public notices make it clear that the use, trading, or mining of cryptocurrencies *within Ethiopia* for transactional purposes is prohibited. This constitutes a de facto geographic restriction across the entire country.

**Country-Specific Sanctions Lists for Crypto:**

Ethiopia does *not* maintain specific national sanctions lists *related to cryptocurrency*. The primary approach is a blanket prohibition on crypto activities. However, individuals or entities engaged in prohibited crypto activities could fall under general Ethiopian laws related to money laundering, illicit financial flows, or foreign exchange violations.

**OFAC (U.S. Department of the Treasury's Office of Foreign Assets Control):**

**Scope:** OFAC sanctions apply to U.S. persons (citizens, residents, entities, and their foreign branches), entities operating in the U.S., and sometimes foreign entities facilitating significant transactions with sanctioned persons or countries.

**Sanctioned Entity Screening:** VASPs must screen all customers and counterparties (originators and beneficiaries) against OFAC's Specially Designated Nationals and Blocked Persons (SDN) List and other relevant sanctions lists (e.g., Sectoral Sanctions Identifications List, Non-SDN Palestinian Legislative Council List).

**Obligation:** Block assets and prohibit transactions with individuals or entities on these lists.

**Relevance to Ethiopia:** If an Ethiopian individual or entity is designated by OFAC for reasons unrelated to crypto (e.g., human rights abuses, terrorism, or other illicit activities), a VASP under U.S. jurisdiction cannot engage in crypto transactions with them.

**Geographic Restrictions:** OFAC imposes comprehensive sanctions on certain countries (e.g., Cuba, Iran, North Korea, Syria). VASPs cannot facilitate crypto transactions that directly or indirectly involve these jurisdictions. This means an Ethiopian VASP customer could not, for instance, send crypto to a recipient in Iran if the VASP is under OFAC jurisdiction.

**Risk-Based Approach:** Implement a robust sanctions compliance program tailored to their specific risks.

**Know Your Customer (KYC) / Customer Due Diligence (CDD):** Identify and verify the identity of customers, beneficial owners, and politically exposed persons (PEPs).

**Transaction Monitoring:** Monitor transactions for suspicious patterns, unusual volumes, or links to sanctioned jurisdictions/entities.

**Sanctions Screening:** Screen all parties to a transaction (including wallet addresses if possible and identifiable) against relevant sanctions lists.

**Record-Keeping:** Maintain records of due diligence and transactions.

**Reporting:** Report blocked property and rejected transactions to OFAC. Report suspicious activity to FinCEN (e.g., SARs).

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

OFAC Sanctions Compliance Guidance for the Virtual Currency Industry (2021): https://home.treasury.gov/system/files/126/ofac_virtual_currency_guidance_20211015.pdf

**Scope:** EU sanctions apply to all persons and entities within the EU, EU nationals, and companies incorporated or constituted under the law of an EU Member State (including their branches abroad).

**Sanctioned Entity Screening:** VASPs under EU jurisdiction must screen against the EU Consolidated List of persons, groups, and entities subject to EU financial sanctions.

**Obligation:** Freeze assets and prohibit making funds or economic resources available to designated persons/entities.

**Geographic Restrictions:** The EU maintains sanctions regimes against various countries. VASPs must ensure they do not facilitate crypto transactions that violate these regimes.

**VASP Compliance Requirements:** Similar to OFAC, including KYC/CDD, transaction monitoring, screening, freezing assets, and reporting to competent authorities. The EU's Anti-Money Laundering Directives (AMLDs) specifically brought VASPs under AML/CFT obligations.

EU Financial Sanctions Map (Consolidated List): https://www.sanctionsmap.eu/#/main

EU Anti-Money Laundering (AMLDs) directives (e.g., 5th AMLD): Official Journal of the EU. For general information: https://ec.europa.eu/info/business-economy-euro/banking-and-finance/financial-supervision-and-risk-management/anti-money-laundering-and-countering-financing-terrorism_en

**Scope:** UN Security Council Resolutions create obligations for all UN member states (including Ethiopia, the U.S., and EU member states) to implement sanctions domestically.

**Sanctioned Entity Screening:** VASPs should screen against UN sanctions lists, particularly those related to terrorism (e.g., Al-Qaeda and ISIL sanctions lists) and proliferation (DPRK, Iran).

**Obligation:** Implement asset freezes, travel bans, and arms embargoes as mandated by the UN Security Council.

**VASP Compliance Requirements:** Member states transpose UN sanctions into national law. VASPs must comply with their national implementation of UN sanctions, which typically mirrors the requirements for OFAC and EU sanctions (KYC, screening, monitoring, reporting).

UN Security Council Sanctions Committees: https://www.un.org/securitycouncil/sanctions/information

The NBE's public notice explicitly warns of "legal measures" against individuals or entities involved in illegal cryptocurrency activities. While specific crypto-focused penalty laws might not exist, prosecution would likely fall under existing statutes related to:

**Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) laws:** If crypto activities are deemed to facilitate illicit finance.

**Foreign Exchange Control Regulations:** If crypto is used to circumvent official currency controls or capital outflow restrictions.

**Financial Market Regulations:** Operating unauthorized payment systems or financial services.

**Penalties** could include significant fines, imprisonment, and confiscation of assets.

**OFAC, EU, and UN Sanctions Penalties:**

**OFAC:** Severe civil monetary penalties (ranging from thousands to millions of dollars per violation) and potential criminal penalties (large fines and imprisonment for individuals). Reputational damage and loss of access to the U.S. financial system are also significant risks.

**EU:** Penalties vary by Member State but can include significant fines (e.g., up to 10% of annual turnover for companies) and imprisonment for individuals.

**UN:** Failure to implement UN sanctions at the national level can lead to international criticism and potential further UN action against the non-compliant state. For individuals and entities, national laws implementing UN sanctions carry similar severe penalties as OFAC and EU regimes.