Tanzania -- Licensing Requirements Regulatory Overview

The regulatory landscape for cryptocurrency and virtual assets in Tanzania is nascent and currently lacks a specific, comprehensive, and enacted legal framework dedicated to the licensing of Virtual Asset Service Providers (VASPs) such as exchanges, custody providers, or payment processors.

While there has been significant discussion and stated intent by Tanzanian authorities, particularly the Bank of Tanzania (BOT) and the Capital Markets and Securities Authority (CMSA), to develop regulations, specific legislation for crypto licensing is yet to be formally published and implemented.

This means that as of late 2023 / early 2024, there isn't a direct "crypto license" that a VASP can apply for in Tanzania under a dedicated crypto regulatory regime.

Here's a breakdown of the current situation and what to consider:

Current Regulatory Status & Intentions

1. 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.
2. Historical Context: In 2021, following comments from President Samia Suluhu Hassan encouraging the Bank of Tanzania to explore cryptocurrency, there was a surge of optimism about forthcoming regulation. The BOT announced it was working on a framework, and the Capital Markets and Securities Authority (CMSA) also indicated its readiness to regulate digital assets that fall under the purview of securities.
3. 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.

Required Licenses (for exchanges, custody providers, payment processors)

Since there is no specific crypto licensing regime, there are no specific "crypto licenses" required. However, companies engaging in activities that might overlap with traditional financial services could potentially be interpreted as falling under existing general financial laws.

• Exchanges: If an exchange facilitates the exchange of fiat currency for cryptocurrencies, or vice versa, it might be seen as engaging in money transmission or payment processing activities.
• 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."

Crucially, this is largely speculative interpretation in the absence of explicit crypto-specific regulation. Any business considering operating in this space should seek direct clarification from the relevant authorities or legal counsel in Tanzania.

Registration vs. Licensing Regime

• Currently Undefined: Since there is no specific regime, the distinction between registration and licensing for virtual assets is currently moot.
• Future Outlook: If a regime were to be introduced, it would likely involve:
  • Licensing: For core VASP activities (exchanges, custody, issuance of certain tokens), implying a higher level of regulatory oversight, capital requirements, and ongoing compliance.
  • Registration: Potentially for less risky activities or for initial market entry, or as a component of a broader licensing framework.

Key Requirements (Hypothetical, based on likely future regulation and existing financial laws)

Should a crypto licensing framework be introduced, or if businesses are deemed to fall under existing financial regulations, the following requirements would typically apply:

1. Capital Requirements:

   • Currently: No specific capital requirements for crypto businesses as there's no dedicated license.
   • Future/Hypothetical: If regulated under existing laws (e.g., as a payment system provider or financial institution), then the capital requirements for those specific licenses would apply. These can vary significantly depending on the nature and scale of activities. A dedicated crypto license would almost certainly come with prescribed minimum capital.

2. AML/KYC Requirements:

   • 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.
   • Virtual asset service providers, if operating, would be expected to implement robust KYC (Know Your Customer) and AML procedures, including customer due diligence, transaction monitoring, record-keeping, and suspicious transaction reporting to the FIU. This aligns with FATF (Financial Action Task Force) recommendations, which Tanzania adheres to.

3. Local Presence:

   • 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.

Application Process (Currently Non-Existent for Crypto)

As there is no specific licensing regime for virtual assets, there is no established application process.

• Future/Hypothetical: Should a framework emerge, the application process would likely involve:
  • Submission of a detailed application form.
  • Provision of business plans, operational policies, risk management frameworks, and AML/KYC policies.
  • Fit and proper assessment for directors, shareholders, and key personnel.
  • Demonstration of technical capabilities and cybersecurity measures.
  • Proof of capital.
  • Payment of application and licensing fees.
  • Ongoing reporting and compliance.

Specific Regulatory References (with URLs)

It's important to reiterate that these references are for general financial oversight and AML/CFT, not specific crypto licensing, as such a dedicated framework does not yet exist.

1. Bank of Tanzania (BOT):

   • Role: The central bank responsible for monetary policy, financial sector regulation (including payment systems), and financial stability. Any future crypto framework is highly likely to involve the BOT, especially concerning stablecoins or payment-related virtual assets.
   • Relevant Law (General): The National Payment Systems Act, 2015. While not crypto-specific, it regulates payment systems and services in Tanzania.
     • BOT Website: https://www.bot.go.tz/
     • Relevant Publications (search for "National Payment Systems Act" or related regulations under Publications/Laws & Regulations): https://www.bot.go.tz/Publications

2. Capital Markets and Securities Authority (CMSA):

   • Role: Regulator of capital markets and securities in Tanzania. The CMSA would likely be involved if certain virtual assets are classified as securities (e.g., security tokens, investment contracts).
   • Relevant Law (General): The Capital Markets and Securities Act, Cap 79 R.E. 2002 (as amended).
     • CMSA Website: https://www.cmsa-tz.org/

3. Financial Intelligence Unit (FIU) Tanzania:

   • Role: The central national agency for receiving, analyzing, and disseminating financial intelligence to combat money laundering and terrorist financing.
   • Relevant Law: The Anti-Money Laundering Act, 2006 (and subsequent amendments), and its regulations. All financial institutions and designated non-financial businesses are subject to these laws.
     • FIU Website (Tanzania): https://www.fiu.go.tz/ (Note: Direct access to the full Act might be through the Attorney General's Chambers or legal databases, but the FIU site provides context and guidance.)

Conclusion

Tanzania represents an evolving market for virtual assets. While the government has expressed interest in regulating the space, a concrete and specific licensing framework for virtual asset service providers (exchanges, custodians, payment processors) is not yet in place. Businesses currently operating or planning to operate in this sector face significant regulatory uncertainty.

Any entity considering engaging in virtual asset activities in Tanzania must:

1. Monitor regulatory developments closely.
2. Assume AML/KYC obligations as per existing Tanzanian law and international standards (FATF).
3. Seek expert legal advice within Tanzania to assess any potential applicability of existing financial services laws to their specific activities and to stay informed on new regulations.