Sudan -- Securities Classification Regulatory Overview

Sudan maintains a highly restrictive stance on cryptocurrencies, and consequently, it does not have a specific legal framework or test (like the Howey test) to classify cryptocurrency tokens as securities.

Instead of detailed classification, the Central Bank of Sudan (CBOS) views cryptocurrencies with significant skepticism and has issued prohibitions and warnings against their use, trading, and issuance within the country. The primary concerns cited are financial stability, consumer protection, anti-money laundering (AML), combating the financing of terrorism (CFT), and foreign exchange control.

Here's a breakdown based on the current understanding of Sudan's regulatory environment:

Legal Test Used (e.g., Howey Test equivalent)

• No Specific Test for Crypto Securities: Sudan does not employ a "Howey test" equivalent or any other specific legal test to differentiate between utility tokens, security tokens, or payment tokens within the cryptocurrency sphere.
• General Prohibition/Discouragement: The existing directives from the Central Bank of Sudan broadly discourage or prohibit all cryptocurrency-related activities due to their unregulated nature and perceived risks. This means the focus is not on classifying which tokens are securities, but rather on preventing or warning against all forms of cryptocurrency.
• Existing Securities Law (Applicability): While Sudan likely has traditional capital market laws governing conventional securities, these laws have not been adapted or interpreted to create a framework for crypto-assets. Therefore, they are not used to classify crypto tokens as securities in a way that would permit their regulated issuance or trading.

Which Tokens Are Considered Securities

• Undifferentiated Approach: Given the prohibitive stance, Sudanese authorities do not generally differentiate between various types of cryptocurrency tokens (e.g., utility, security, payment, stablecoins) for regulatory purposes related to securities classification.
• Broadly Viewed as Risky/Prohibited: All cryptocurrencies are broadly viewed as highly speculative, unregulated, and potentially illegal under existing financial and foreign exchange regulations. There is no concept of a "compliant" security token in Sudan's current regulatory landscape.

Registration/Exemption Requirements for Token Issuers

• None Exist: Since the issuance, trading, and use of cryptocurrencies are largely discouraged or prohibited, there are no established registration or exemption requirements for token issuers in Sudan.
• Unauthorized Activity: Any entity attempting to issue cryptocurrency tokens within Sudan would likely be operating outside the authorized financial system and could face regulatory action or penalties under existing financial and banking laws.

Secondary Trading Rules

• No Specific Rules: As with issuance, there are no specific regulatory rules governing the secondary trading of cryptocurrency tokens in Sudan.
• Discouraged/Prohibited: Any trading would occur on unregulated, likely foreign, platforms. Individuals engaging in such activities would be doing so at their own risk and potentially in contravention of Central Bank directives regarding foreign exchange and financial activities.

Enforcement Examples

Enforcement in Sudan primarily takes the form of official warnings and directives from the Central Bank rather than specific prosecutions for "security token violations" due to the lack of a defined legal framework for crypto securities.

1. Central Bank Warnings: The most common form of "enforcement" is the issuance of public statements and circulars by the Central Bank of Sudan warning financial institutions and the public against dealing in or facilitating cryptocurrency transactions. These warnings typically highlight the risks of volatility, fraud, money laundering, and the lack of legal recourse for users.
   • Example: In recent years, the CBOS has repeatedly reiterated its stance that cryptocurrencies are not recognized as legal tender, are highly risky, and dealing with them is prohibited for financial institutions. These pronouncements serve to deter both institutions and individuals.
2. Broader Financial Regulations: While not specific to "security tokens," any significant cryptocurrency activity that involves foreign exchange or is suspected of facilitating illicit financial flows would likely fall under existing:
   • Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) laws: If crypto transactions are linked to suspicious activities.
   • Foreign Exchange Control Regulations: Sudan has strict controls over foreign currency. Using cryptocurrencies as an alternative could be seen as circumventing these controls.
   • Central Bank of Sudan Act: Which empowers the CBOS to maintain financial stability and regulate financial institutions.

There have been no widely reported public enforcement actions specifically targeting the issuance or trading of cryptocurrency tokens as unregistered securities within Sudan, precisely because the regulatory approach is one of broad discouragement/prohibition rather than specific classification and licensing.

Specific Legislation and Regulatory Guidance URLs

It is challenging to provide direct, specific legislation URLs in English for Sudan's cryptocurrency stance, as official circulars and laws are often issued in Arabic and may not be readily available on official websites or translated. However, the regulatory position is primarily driven by:

1. Central Bank of Sudan Act: This act grants the CBOS the authority to regulate the financial sector and maintain financial stability, underpinning its stance on cryptocurrencies.
   • Central Bank of Sudan Website: https://cbos.gov.sd/ (While specific circulars might be hard to locate, this is the official source of regulatory pronouncements.)
2. Circulars and Directives from the Central Bank of Sudan: These are the primary instruments through which the CBOS communicates its warnings and prohibitions regarding cryptocurrencies to financial institutions and the public. These are often reported by international bodies and news outlets.
   • Example of reported stance: The Financial Action Task Force (FATF) and its regional body, the Middle East and North Africa Financial Action Task Force (MENAFATF), often report on countries' AML/CFT frameworks, including their stance on virtual assets. Sudan's compliance reports or mutual evaluation reports might reference its position.
   • IMF Reports: The International Monetary Fund frequently discusses digital currencies in its country reports, often referencing the domestic regulator's stance.
   • Library of Congress Report on Regulation of Cryptocurrencies: These types of reports often summarize global regulations and can be a good secondary source for Sudan's position. While not direct legislation, they often cite the official source:
     • Example: https://www.loc.gov/law/help/cryptocurrency/ (You would need to navigate to the Sudan section if available in the latest version.)

In summary, Sudan's approach is to broadly prohibit or strongly discourage cryptocurrency activities rather than establish a detailed framework for their classification as securities. There is no "Sudanese Howey Test," and any crypto-related activity operates in a highly uncertain and potentially unlawful environment.