Custodial wallet / SaaS in Tanzania

There is no specific "crypto custodian license" currently established in Tanzania. Any entity wishing to offer such services would operate in a largely unregulated space, though they might fall under general financial service provider rules if their activities are deemed to align with existing licensed financial services.

Bank of Tanzania (BOT): The central bank responsible for monetary policy and financial sector oversight, including payment systems. They are currently leading the efforts to develop a regulatory framework for digital assets.

Capital Markets and Securities Authority (CMSA): If digital assets are classified as securities, the CMSA would likely have jurisdiction over certain aspects, including custody for such assets.

Financial Intelligence Unit (FIU): Oversees Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) compliance. Any future crypto entity, including custodians, would be subject to existing AML/CFT laws.

There are no specific rules mandating the segregation of client digital assets from the custodian's proprietary assets.

There are no specific insurance or bonding requirements for crypto custodians.

There are no specific mandates requiring the use of cold storage (offline storage) for client digital assets.

There is no specific legal definition for a "qualified crypto custodian" in Tanzanian law.

Lack of Specific Licensing Regime: There is no specific law or regulation in Tanzania that explicitly defines, regulates, and provides for the licensing of cryptocurrency exchanges, custody providers, or payment processors as virtual asset businesses.

Current Stance (Implied): While formal prohibition may not be explicit in specific crypto legislation, the lack of a regulatory framework and the BOT's historical cautious stance on unregulated financial activities mean that operating an unlicensed crypto business could face significant legal uncertainty and potential challenges under existing general financial laws.

Custody Providers: If a provider holds significant assets on behalf of clients, it could potentially be viewed through the lens of trust services or asset management, which are typically regulated.

Payment Processors: Companies facilitating payments using virtual assets, especially if they involve conversions to/from fiat currency, might be subject to the existing National Payment Systems Act, 2015 (and its regulations) administered by the Bank of Tanzania, depending on the interpretation of "payment system" and "electronic money."

HIGHLY LIKELY & CRITICAL: Even without a specific crypto licensing regime, Tanzania has a robust Anti-Money Laundering Act, 2006 (and subsequent amendments/regulations) and a Financial Intelligence Unit (FIU). Financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) are obligated to comply with AML/CFT (Anti-Money Laundering and Combating the Financing of Terrorism) requirements.

Highly Likely: For any regulated financial service, a local presence (e.g., a locally incorporated entity, physical office, local management) is typically a prerequisite in Tanzania. This would almost certainly be a requirement for any future crypto licensing.

The Anti-Money Laundering Act (AMLA), 2006 (as amended): This is the principal legislation establishing the legal framework for combating money laundering. It defines "financial institutions" and "other reporting institutions" and imposes obligations on them. While VASPs may not be explicitly listed, their activities are likely to be interpreted as falling under the scope of financial services or other reporting obligations.

The Anti-Money Laundering Regulations, 2012 (as amended): These regulations provide detailed rules and procedures for implementing the AMLA, including customer due diligence, suspicious transaction reporting, and record-keeping.

Identification and Verification of Customers:

Beneficial Ownership: Identifying and verifying the identity of the ultimate beneficial owner(s) of the virtual assets or the entity, ensuring that the VASP knows who ultimately owns or controls the funds/assets.

Ongoing Monitoring: Continuously monitoring the business relationship and transactions undertaken by the customer to ensure that they are consistent with the VASP's knowledge of the customer, their business, and risk profile. This includes monitoring for unusual or suspicious activities.

Enhanced Due Diligence (EDD): Applying EDD for higher-risk situations, which may include:

Obligation to Report: Any VASP, or its employees, that knows or suspects that a transaction (or attempted transaction) involves funds or virtual assets derived from illegal activity, or is related to money laundering or terrorism financing, must report it.

Duration: All records must be kept for a minimum period of five (5) years after the business relationship has ended or after the date of the transaction.

Records of all virtual asset transactions, including transaction dates, amounts, types of virtual assets, sending and receiving addresses (if applicable), and originating/beneficiary information.

Entity Targeted: The general public, financial institutions, and any individuals or entities attempting to deal in, facilitate, or operate businesses involving cryptocurrencies. Violation Type: Dealing in, facilitating, or promoting instruments not recognized as legal tender; operating unauthorized financial services. Penalty Amount: Not a specific fine amount applied in a single action, but the outcome implies potential prosecution under existing financial laws for unauthorized activities.

Outcome: Cryptocurrencies are not recognized as legal tender in Tanzania. Financial institutions are prohibited from facilitating crypto transactions. This creates a high-risk environment for anyone operating a crypto business, as they would be operating outside the legal framework and subject to potential criminal charges rather than regulatory fines.

Bank of Tanzania's Stance (via news report):