Custodial wallet / SaaS in Madagascar

No Official Recognition or Supervision: The BCM explicitly stated that it does not recognize, regulate, or supervise cryptocurrencies or their underlying technologies.

No Specific Framework: There is no specific legal or regulatory framework governing the issuance, trading, or custody of cryptocurrencies in Madagascar.

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.

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.

Insurance/Bonding Requirements: There are no specific insurance or bonding requirements for digital asset custodians.

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.

Qualified Custodian Definitions: There is no legal or regulatory definition of a "qualified custodian" in the context of digital assets.

No Specific Crypto Licensing Regime: There is no specific law or regulation mandating licenses for cryptocurrency exchanges, custody providers, or virtual asset payment processors in Madagascar, unlike jurisdictions that have implemented frameworks like MiCA (EU), MAS (Singapore), or VARA (Dubai).

Central Bank Caution/Warnings: The Banque Centrale de Madagascar (BCM) – the country's central bank and primary financial regulator – has historically maintained a cautious, if not prohibitive, stance towards cryptocurrencies. They have likely issued public warnings about the risks associated with virtual assets, including price volatility, lack of consumer protection, and potential for illicit finance. These warnings often imply that crypto is not recognized as legal tender and regulated financial institutions should not facilitate their use.

AML/CFT Implications: While there are no crypto-specific AML/CFT regulations, Madagascar, as a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) and subject to FATF recommendations, has general anti-money laundering and combating the financing of terrorism (AML/CFT) laws. The Cellule de Renseignement Financier (CRF) is Madagascar's Financial Intelligence Unit.

In the absence of specific VASP regulations, these general AML/CFT laws could be interpreted to apply to entities dealing with virtual assets, especially if they interact with the traditional financial system. However, without specific guidance, the application remains ambiguous.

FATF Recommendation 15 specifically calls for countries to regulate and supervise VASPs for AML/CFT purposes. Madagascar is expected to implement these recommendations, which could lead to future regulations.

Custody Providers: No specific licenses are required for virtual asset custody.

Local Presence: Typically, a locally incorporated entity (e.g., a company registered in Madagascar) with a physical presence and local management.

High Regulatory Risk: Operating a cryptocurrency business in Madagascar currently carries significant regulatory risk due to the absence of clear rules. This can lead to uncertainty regarding legality, potential for sudden regulatory changes, or difficulties in interacting with traditional financial institutions.

Loi n° 2018-043 du 19 décembre 2018 relative à la lutte contre le blanchiment de capitaux et le financement du terrorisme (Law No. 2018-043 of December 19, 2018, on the Fight against Money Laundering and the Financing of Terrorism).

While it may not explicitly name "Virtual Asset Service Providers," the broad definitions within such laws typically encompass entities that facilitate financial transfers, exchanges, or safekeeping of value, which can include virtual assets. VASPs are often implicitly or explicitly considered reporting entities under the "other financial institutions" or "designated non-financial businesses and professions" categories, especially regarding FATF Recommendation 15.

Identification and Verification:

Beneficial Ownership: Identify and verify the natural person(s) who ultimately own or control the customer, or the natural person(s) on whose behalf a transaction is being conducted.

Ongoing Monitoring: Conduct ongoing due diligence on the business relationship and scrutiny of transactions undertaken throughout the course of that relationship to ensure that the transactions are consistent with the VASP's knowledge of the customer, their business and risk profile, including, where necessary, the source of funds.

Obligation to Report: VASPs, as reporting entities, are legally obligated to report any suspicious transactions or activities to the Financial Intelligence Unit (FIU), regardless of the amount involved. This includes transactions that are unusual, lack clear economic rationale, or appear to be connected to money laundering or terrorist financing.

Duration: Records must typically be kept for at least five (5) years after the business relationship has ended or after the date of an occasional transaction.

Risk-Based Approach: Apply CDD measures on a risk-sensitive basis: