Madagascar -- Custody Regulations Regulatory Overview

Based on current available information, Madagascar has a very limited and largely cautionary regulatory framework concerning cryptocurrencies and digital assets, with no specific, dedicated regulations for digital asset custody.

The primary official stance comes from the Banque Centrale de Madagascar (BCM), which has issued warnings regarding the risks associated with cryptocurrencies.

Here's a breakdown of the regulatory landscape concerning digital asset custody in Madagascar:

Overall Regulatory Stance

The Banque Centrale de Madagascar (BCM) issued a public warning (Communiqué de Presse) on November 27, 2018, concerning the risks related to cryptocurrencies. Key points from this communiqué and the general environment include:

• Not Legal Tender: Cryptocurrencies are not recognized as legal tender in Madagascar.
• No Official Recognition or Supervision: The BCM explicitly stated that it does not recognize, regulate, or supervise cryptocurrencies or their underlying technologies.
• High Risk: The BCM highlighted the risks associated with cryptocurrencies, including price volatility, lack of consumer protection, potential for fraud, and use in illicit activities.
• No Specific Framework: There is no specific legal or regulatory framework governing the issuance, trading, or custody of cryptocurrencies in Madagascar.

Regulatory Reference:

• Banque Centrale de Madagascar (BCM) - Communiqué de Presse du 27 novembre 2018 sur les risques liés aux crypto-monnaies: https://www.banque-centrale.mg/index.php/communique-de-presse (You would need to navigate to the Communiqué de Presse section and look for the November 27, 2018 statement, which is in French and Malagasy).

Digital Asset Custody Regulations in Madagascar

Given the above, there are no specific regulations or requirements addressing digital asset custody in Madagascar for the following aspects:

1. Custodial License Requirements: There are no specific licenses required for entities wishing to provide cryptocurrency custody services, as such services are not officially recognized or regulated.
2. Segregation of Client Assets Rules: Without a regulatory framework for digital assets, there are no specific rules mandating the segregation of client digital assets from the custodian's own assets.
3. Insurance/Bonding Requirements: There are no specific insurance or bonding requirements for digital asset custodians.
4. Cold Storage Mandates: There are no specific mandates for the use of cold storage (offline storage) for digital assets. Operational security measures would be at the discretion of the service provider, if any exists.
5. Qualified Custodian Definitions: There is no legal or regulatory definition of a "qualified custodian" in the context of digital assets.
6. Pending Custody Legislation: There is no publicly available information or indication of specific pending legislation dedicated to digital asset custody in Madagascar. The focus remains on general warnings and the lack of official recognition.

Application of Existing Laws (Limited)

While there are no specific crypto regulations, any entity operating within Madagascar, including those potentially dealing with digital assets, would still be subject to general laws, such as:

• Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) Laws: Madagascar is a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG). While not specifically targeting crypto custody, if any entity were to facilitate financial transactions involving digital assets, it might indirectly fall under the purview of general AML/CFT obligations, such as customer due diligence and suspicious transaction reporting, especially if the assets are converted to/from fiat currency within a regulated financial institution. However, this typically applies to financial institutions, and crypto exchanges are not formally regulated as such.

Conclusion

Madagascar currently maintains a highly cautious stance towards cryptocurrencies and digital assets. The regulatory environment is characterized by official warnings from the central bank and a complete absence of specific legislation or regulations governing digital asset custody. Any entity providing such services would operate in an unregulated space, without the benefit of a clear legal framework or consumer protections.