Self-custodial wallet / non-custodial software in Madagascar

Such activities are currently unrestricted but carry significant legal and operational risks due to the absence of specific protections or guidelines.

Such activities may be implicitly restricted or discouraged under broader financial regulations, or even face outright prohibitions from the Central Bank.

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.

Registration vs. Licensing Regime: Currently, neither a dedicated registration nor a licensing regime for VASPs exists in Madagascar.

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.

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.

Identification and Verification:

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.

Enhanced CDD (EDD): Required for higher-risk situations, such as:

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.

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.