Madagascar -- Regulatory Status Regulatory Overview

Madagascar's regulatory landscape for cryptocurrencies and virtual assets is currently characterized by a cautious and largely unregulated approach, with strong warnings against their use issued by the central bank. There is no comprehensive legal framework specifically governing virtual assets.

Here's a breakdown:

Regulatory Approach

• Approach: Unregulated, with official warnings/disapproval. Madagascar has not implemented a dedicated regulatory framework for virtual assets. Instead, the Central Bank has issued strong advisories highlighting the risks associated with cryptocurrencies. This leans towards a "partial ban" in practice due to the severe warnings and lack of legal recognition, rather than a comprehensive legislative ban. The government appears to be monitoring the situation rather than actively promoting or regulating the space for now.
• Legal Tender Status: Cryptocurrencies are not recognized as legal tender in Madagascar.

Primary Regulatory Bodies

The primary body that has officially addressed virtual assets is:

1. Banque Centrale de Madagascar (BCM - Central Bank of Madagascar)
   • Role: The BCM is responsible for monetary policy, financial stability, and the regulation of banking and payment systems. It has taken the lead in issuing warnings due to the potential risks crypto poses to financial stability, consumer protection, and anti-money laundering efforts.
   • Website: http://www.banque-centrale.mg

Other relevant bodies, though not directly regulating crypto yet, would include:

• Autorité des Marchés Financiers de Madagascar (AMF - Financial Markets Authority of Madagascar)
  • Role: Regulates financial markets, securities, and investment services. Could potentially become involved if virtual assets were to be classified as securities.
  • Website: https://www.amf.mg/

Key Legislation Names and Dates

There is no specific legislation dedicated to the regulation of cryptocurrencies or virtual assets in Madagascar. The most significant official pronouncement comes from the Central Bank:

1. Avertissement de la Banque Centrale de Madagascar concernant les opérations effectuées en crypto-monnaies (Warning from the Central Bank of Madagascar regarding operations carried out in crypto-currencies)
   • Date: 23 December 2021
   • Content: This official communiqué warns the public about the risks associated with using, holding, or investing in cryptocurrencies. Key points include:
     • Cryptocurrencies are not recognized as legal tender.
     • They are not regulated by any Madagascan financial authority.
     • Users are exposed to high risks of fraud, cybercrime, money laundering, and terrorist financing.
     • There is no legal protection or recourse for users in case of loss or fraudulent activities.
     • The BCM strongly advises against engaging in cryptocurrency operations.
   • Reference (URL): The communiqué is usually found in the "Avertissements aux publics" section of the BCM website. While direct PDF links can change, here's where to look:
     • http://www.banque-centrale.mg/index.php/avertissements-aux-publics (Navigate to the warnings issued around December 2021).

Existing Anti-Money Laundering and Counter-Terrorist Financing (AML/CFT) legislation, such as Law N° 2004-020 on the fight against money laundering, terrorist financing, and illicit trafficking in weapons, applies to traditional financial institutions. However, it does not specifically address virtual assets or provide a framework for their regulation or supervision in an AML/CFT context, making it a gap that the country might need to address in line with FATF recommendations.

Current Stance on Crypto Trading and Exchanges

• Trading: Crypto trading by individuals is strongly discouraged and undertaken at one's own risk. The BCM's warning highlights that there is no legal protection or recourse for traders. While not explicitly illegal in a legislative sense (e.g., you won't be arrested for holding crypto), engaging in it is done outside any recognized or regulated financial system, making it high-risk.
• Exchanges: There is no licensing or regulatory framework for cryptocurrency exchanges to operate in Madagascar. As such, any entity operating a crypto exchange would be doing so outside the regulated financial system. The BCM's warning extends to the use of such platforms, emphasizing the lack of oversight and consumer protection.

Summary

Madagascar maintains a highly cautious stance on cryptocurrencies. The Central Bank has issued clear warnings against their use due to the inherent risks and lack of regulation, effectively discouraging participation in the crypto market. While there isn't a direct legislative ban, the absence of a regulatory framework combined with official warnings means that crypto activities, including trading and operating exchanges, are done without legal recognition or protection and are viewed with significant skepticism by financial authorities. The country is likely to come under increasing pressure from international bodies like the FATF (Financial Action Task Force) and ESAAMLG (Eastern and Southern Africa Anti-Money Laundering Group) to develop specific regulations for virtual assets in the future.