Jordan -- Custody Regulations Regulatory Overview

Jordan's regulatory landscape for cryptocurrencies and digital assets, particularly concerning custody, is still evolving and generally leans towards caution and anti-money laundering (AML) / counter-terrorist financing (CFT) compliance rather than a comprehensive, dedicated framework for crypto custody.

Here's a breakdown based on available information:

General Regulatory Stance

The Central Bank of Jordan (CBJ) has historically issued warnings against dealing with cryptocurrencies due to their volatility, lack of regulation, and associated risks. They are generally not recognized as legal tender in Jordan. However, Jordan has an AML/CFT law that addresses Virtual Assets (VAs) and Virtual Asset Service Providers (VASPs).

Key Regulations and Relevant References

1. Anti-Money Laundering and Counter-Terrorist Financing Law No. 20 of 2021: This is the most relevant piece of legislation for virtual assets. It aligns Jordan's framework with the Financial Action Task Force (FATF) recommendations, which include guidance on virtual assets and VASPs.

   • Reference: Anti-Money Laundering and Counter-Terrorist Financing Law No. 20 of 2021 (available through official government gazettes or legal databases). While a direct public URL for the full English text might be hard to find, official government sources like the National Library of Legislation in Jordan often host these.

2. Central Bank of Jordan (CBJ) Stance: While not specific custody regulations, the CBJ has issued statements regarding cryptocurrencies.

   • Reference: CBJ Official Website (www.cbj.gov.jo) - Look for press releases or circulars concerning virtual currencies. For example, the CBJ issued warnings in 2017 and 2018 regarding the risks of dealing with cryptocurrencies, stating they are not regulated by the CBJ.

Custody Regulations Breakdown:

Given the current framework, specific, dedicated crypto custody regulations akin to those in more developed jurisdictions (e.g., US, Europe) are largely absent. Instead, the focus is on AML/CFT compliance for entities dealing with virtual assets.

1. Custodial License Requirements:

• No Specific "Crypto Custody License": There is no explicit "crypto custody license" in Jordan. Instead, any entity providing "virtual asset services," which includes custody, would likely fall under the purview of the Anti-Money Laundering and Counter-Terrorist Financing Law No. 20 of 2021.
• VASP Definition: The AML/CFT law typically defines "Virtual Asset Service Providers" (VASPs) broadly to include entities that provide services such as exchange between VAs and fiat currencies, exchange between one or more forms of VAs, transfer of VAs, safekeeping and/or administration of VAs or instruments enabling control over VAs (i.e., custody), and participation in and provision of financial services related to an issuer's offer and/or sale of a virtual asset.
• Registration/Licensing for AML/CFT Purposes: While not a specific custody license, VASPs performing custody services are expected to be subject to AML/CFT obligations, which often include registration or licensing with the relevant supervisory authority (e.g., the Anti-Money Laundering and Counter-Terrorist Financing Unit (AMLU) or potentially the CBJ/JSC if they are designated as supervisors for VASPs under the AML law's implementing regulations). This registration primarily ensures adherence to AML/CFT reporting and due diligence requirements.

2. Segregation of Client Assets Rules:

• No Explicit Mandates: The existing AML/CFT law primarily focuses on financial crime prevention. It does not explicitly mandate rules for the segregation of client virtual assets from the firm's own assets. While this is a critical prudential measure for custodians globally, it is not a statutory requirement in Jordan's current crypto regulatory framework. Best practices would, however, dictate such segregation.

3. Insurance/Bonding Requirements:

• No Explicit Mandates: Similar to asset segregation, there are no explicit statutory requirements for insurance or bonding specific to virtual asset custodians in Jordan. This would typically be part of a more comprehensive prudential regulatory framework that has yet to be established for crypto.

4. Cold Storage Mandates:

• No Explicit Mandates: The AML/CFT law does not delve into technical security measures like mandating the use of cold storage for virtual assets. Operational security measures like cold storage are generally left to the VASP's discretion and internal risk management policies, though they are considered best practices for safeguarding client assets.

5. Qualified Custodian Definitions:

• No Specific Definition for Crypto: Jordan does not have a specific definition of a "qualified custodian" for virtual assets within its current legislation. The closest concept is the VASP definition under the AML/CFT law, which primarily defines service providers for the purpose of imposing AML/CFT obligations, not for establishing prudential or operational qualifications for custody.

6. Any Pending Custody Legislation:

• While Jordan is committed to implementing FATF standards, and the AML/CFT Law No. 20 of 2021 covers virtual assets, there is currently no publicly announced or well-advanced pending legislation specifically for dedicated cryptocurrency custody licensing or a comprehensive regulatory framework beyond AML/CFT.
• However, the global trend is towards greater regulation of digital assets. Jordan, like many other countries, may eventually develop more specific prudential regulations for VASPs, including those offering custody services, as its financial sector evolves. Such developments would likely originate from the Central Bank of Jordan or the Jordan Securities Commission if virtual assets begin to intersect more directly with traditional banking or securities markets.

Summary: Jordan's approach to virtual asset custody is primarily driven by AML/CFT concerns under Law No. 20 of 2021. There are no specific licenses for crypto custody, explicit rules for asset segregation, insurance/bonding, cold storage mandates, or a definition of a "qualified custodian." Entities offering custody services for virtual assets would be considered VASPs and would need to comply with AML/CFT requirements, which may involve registration or licensing for that purpose. The regulatory environment is nascent and subject to change.

Disclaimer: This information is for general informational purposes only and does not constitute legal or financial advice. The regulatory landscape for digital assets is dynamic and subject to change. For specific advice regarding Jordan's regulations, it is essential to consult with legal professionals specializing in Jordanian law and financial regulations.