Stablecoin issuer / redeemer in Yemen

Yemen does not have dedicated laws or regulations specifically addressing virtual assets, cryptocurrencies, or Virtual Asset Service Providers (VASPs).

The focus of the existing financial regulatory bodies (the two CBYs) is primarily on traditional banking, foreign exchange, and general financial stability, often under challenging circumstances.

None Specific for Virtual Assets.

In the absence of specific crypto regulations, any entity attempting to operate a cryptocurrency exchange, provide custody services, or process payments using virtual assets would fall into a grey area of legality or risk being interpreted under existing, broader financial laws, or even being outright prohibited.

Exchanges: Could potentially be viewed as operating an unlicensed money service business (MSB), money changer, or even an unregulated financial institution by either CBY, which would typically require specific licenses for foreign exchange and money transfers.

Custody Providers: Might be interpreted as holding funds or assets on behalf of others, which in a traditional context could require a banking or trust license.

Payment Processors: Could be viewed as an unauthorized payment service provider or a money transmitter.

De Facto Prohibition/High Risk: Without a clear legal framework, engaging in such activities carries significant legal risk, including potential penalties for operating an unlicensed financial service, confiscation of assets, or criminal charges, depending on how authorities might interpret activities. It is more likely to be viewed with suspicion than to be regulated.

Local Presence: If a licensing regime were to be established, a local presence (e.g., registered entity, physical office, local management) would almost certainly be a requirement, as is common for financial services firms in most jurisdictions.

Custodial License Requirements: No licenses are issued for cryptocurrency custody services as such activities are not recognized or permitted.

Segregation of Client Assets Rules: There are no rules for segregating client assets for crypto custody, as regulated custody services are not established.

Central Bank of Yemen (Sana'a Branch): In 2018-2019, the CBY in Sana'a reportedly issued warnings against dealing with cryptocurrencies, deeming them illegal and speculative.

Central Bank of Yemen (Aden Branch): Similarly, the CBY in Aden has also warned against cryptocurrencies.

Prohibitive Stance: When an activity is prohibited, there's less incentive to publish detailed regulatory frameworks for it; rather, the focus is on blanket warnings or bans.

Law No. 1 of 2010 on Combating Money Laundering and Terrorism Financing: This is the primary AML/CFT law in Yemen. It establishes the legal framework for identifying, freezing, and confiscating illicit funds, and mandates reporting obligations for financial institutions.

Central Bank of Yemen Regulations: The CBY issues various regulations and instructions to financial institutions (banks, money exchangers, insurance companies) regarding the implementation of the AML/CFT law. These would cover traditional financial services.

Identification and Verification: Obtaining and verifying the identity of customers (individuals and legal entities) using reliable, independent source documents, data, or information. This includes name, address, date of birth/incorporation, nationality, identification numbers.

Beneficial Ownership: Identifying and verifying the beneficial owner(s) of legal entities.

Ongoing Monitoring: Conducting 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 obliged entity's knowledge of the customer, their business, and risk profile.

Enhanced Due Diligence (EDD): For higher-risk customers, politically exposed persons (PEPs), or complex transactions, more rigorous checks would be required. Given the illegal status of crypto, any involvement would inherently be high-risk.

Obligation to Report: Financial institutions and designated non-financial businesses and professions (DNFBPs) are legally obliged to report any suspicious transactions or activities to the Financial Information Unit (FIU).

Virtual Assets: Given the outright ban, any transaction involving virtual assets would inherently be considered suspicious and a potential predicate offense under the AML/CFT law.

Duration: Financial institutions are required to maintain records of customer identification data, account files, business correspondence, and transaction data for a period of at least five (5) years after the business relationship has ended or the transaction has been completed.

Central Bank of Yemen (CBY): The CBY is the primary financial sector regulator and supervisor responsible for overseeing AML/CFT compliance of banks and other financial institutions. Due to the ongoing conflict, there are effectively two CBYs:

Financial Information Unit (FIU): This unit is responsible for receiving, analyzing, and disseminating suspicious transaction reports (STRs) to law enforcement agencies. The FIU in Yemen operates under the umbrella of the government's financial oversight mechanisms.