Stablecoin issuer / redeemer in Eswatini

No Explicit Classification: Eswatini legislation does not explicitly classify stablecoins as e-money, payment tokens, or securities.

Central Bank Perspective (Implied): The CBE's public statements typically group cryptocurrencies, including potentially stablecoins, under a broad category of "virtual currencies" or "digital assets" that are not legal tender, are unregulated, and carry significant risks. They are not recognized as a form of legal payment or e-money under current financial services laws.

No Specific Requirements: Given the absence of a specific regulatory framework for stablecoins, there are no explicit reserve requirements mandated by Eswatini law or the CBE for stablecoin issuers.

Unregulated Status: Any stablecoin operating in Eswatini would do so outside the regulated financial system, meaning there are no prudential requirements like reserve backing or auditing.

No Specific Licensing Regime: There is no specific licensing regime for stablecoin issuers in Eswatini.

Unregulated Activity: Entities wishing to issue stablecoins would not be able to obtain a specific license for this activity from the Central Bank of Eswatini or the Financial Services Regulatory Authority (FSRA). Such activities would fall outside the regulated financial sector.

No Mandated Rights: As stablecoins are not regulated, there are no legally mandated redemption rights for stablecoin holders under Eswatini law.

Contractual Basis Only: Any redemption rights would solely depend on the terms and conditions set forth by the stablecoin issuer and the contractual agreement (if any) between the issuer and the holder. Given the unregulated nature, enforcement of such contractual rights could be challenging.

The CBE has issued several advisories warning the public about the risks associated with cryptocurrencies, including the fact that they are not legal tender and are not regulated. While specific stablecoins are not singled out, they fall under these general warnings.

Proceeds of Crime Act, 2009 (as amended):

Financial Services Regulatory Authority (FSRA) Act, 2010:

An investment of money or assets: The investor commits capital to acquire the token.

In a common enterprise: The investment is pooled with others, or the value of the token is tied to a broader project or business venture managed by others.

With an expectation of profits: The investor anticipates financial gain (e.g., capital appreciation, dividends, revenue sharing, or other forms of return) from holding the token.

Derived solely or substantially from the efforts of others: The profits are expected to come from the managerial or entrepreneurial efforts of a third party (the issuer, promoter, or other entities), rather than the investor's own efforts.

Prospectus Requirements: For public offerings of securities, a comprehensive prospectus must be prepared and registered with the FSRA. This prospectus must disclose all material information relevant to the investment, risks, and the issuer.

Licensing: Issuers, promoters, or financial intermediaries involved in offering or distributing securities may need to be licensed by the FSRA as financial services providers (e.g., investment advisors, brokers, collective investment scheme managers).

Licensed Trading Platforms: Trading would likely need to occur on an exchange or platform licensed and regulated by the FSRA as a securities exchange. Unregulated trading platforms would be illegal for securities.

AML/CFT Registration: Eswatini, as a member of the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), is committed to implementing FATF standards. This typically means that VASPs, including those providing custody, are required to be registered or licensed with the FIU or a designated authority for AML/CFT compliance. This registration focuses on identifying the VASP, its beneficial owners, and ensuring it has robust AML/CFT policies and procedures.

Prevention of Organised Crime Act (POCA) & FIU Act: The primary legislation addressing AML/CFT in Eswatini includes the Prevention of Organised Crime Act and the Financial Intelligence Unit Act. These acts, along with their accompanying regulations, are the most likely place where definitions of "virtual assets" and "VASPs" and their reporting obligations would be found. While specific details on custody per se might be absent, the entity providing custody would be subject to VASP AML/CFT obligations.

FATF Recommendations: Eswatini, through its membership in ESAAMLG, is expected to continue enhancing its legal framework to fully comply with FATF Recommendation 15 on new technologies and Virtual Asset Service Providers (VASPs). This implies that future amendments or new regulations could introduce more specific requirements for VASPs, which might eventually encompass more detailed aspects of custody.

ISIL (Da'esh) & Al-Qaida Sanctions List: Maintained by the 1267/1989/2253 Committee.

Legal Basis in Eswatini: Eswatini's AML/CFT laws, notably the Prevention of Organised Crime Act, 2018, and the Money Laundering and Financing of Terrorism (Prevention) Act, 2011 (as amended), mandate compliance with these international obligations. The Financial Intelligence Unit (FIU) of Eswatini is responsible for ensuring the implementation of these measures.