Centralized exchange in Zambia

Unregulated, but Not Banned: Crypto trading and the operation of crypto exchanges in Zambia are not explicitly illegal, but they are also not officially regulated or licensed by any specific framework for virtual assets. This places them in a "grey area."

Not Legal Tender: Cryptocurrencies are not recognized as legal tender in Zambia.

No Investor Protection: Since they are unregulated, consumers engaging in crypto transactions do so at their own risk, with no recourse to the BoZ or other regulatory bodies for protection against loss, fraud, or operational failures of exchanges.

Currently, there are no specific licenses for crypto asset custodians in Zambia. Financial institutions dealing with traditional securities or funds require licensing from the Bank of Zambia or the Securities and Exchange Commission, but these licenses do not extend to, nor are there separate licenses for, digital asset custody.

There are no explicit rules for the segregation of client crypto assets. In traditional finance, robust rules exist requiring licensed entities to segregate client funds and assets from their own operational funds. However, these do not specifically apply to crypto assets due to the absence of specific crypto legislation.

No specific insurance or bonding requirements for crypto custodians exist in Zambia. Traditional financial service providers are subject to various capital adequacy and, in some cases, professional indemnity insurance requirements. Without a regulatory framework for crypto custody, these do not apply to virtual asset service providers (VASPs) for their crypto activities.

There are no mandates or specific requirements for cold storage (offline storage) of crypto assets. While cold storage is a widely recognized security best practice in the crypto industry, Zambian regulation does not address such operational or technical requirements for custodians.

There is no legal or regulatory definition of a "qualified custodian" specific to digital assets in Zambia. The concept of a "qualified custodian" is generally found in jurisdictions with developed securities regulations for investment advisers (e.g., in the US, under the Investment Advisers Act). Since digital assets are not explicitly defined as securities requiring such custody in Zambia, the term doesn't apply within the existing framework for crypto.

The BoZ has historically advised financial institutions against dealing in crypto assets due to the lack of regulation and associated risks.

No, not specifically for virtual assets and VASPs. Zambia's primary AML/CFT legislation, the Anti-Money Laundering and Countering of Terrorism Act, No. 13 of 2010 (and its amendments), as well as associated regulations, does not explicitly extend to the comprehensive regulation of virtual assets or the oversight of VASPs as financial institutions or Designated Non-Financial Businesses and Professions (DNFBPs).

The ESAAMLG's 2019 Mutual Evaluation Report of Zambia highlighted significant gaps in this area. It noted that virtual assets were not adequately covered by the AML/CFT framework, and there was no specific licensing or registration regime for VASPs.

Which VASPs are Covered:

N/A. Since the specific framework for virtual assets and the Travel Rule has not been adopted, there is no effective date.

N/A. Without specific legislation covering VASPs, there are no defined threshold amounts for the Travel Rule. For traditional wire transfers, the threshold amounts for originator and beneficiary information requirements would typically follow existing AML/CFT regulations.

Financial Intelligence Centre (FIC) Zambia: The FIC is Zambia's financial intelligence unit and the primary body for AML/CFT oversight.

Bank of Zambia (BoZ): The central bank has issued advisories warning the public about the risks associated with cryptocurrencies due to their unregulated nature. This indicates a cautious approach rather than active regulation.

Anti-Money Laundering and Countering of Terrorism Act, No. 13 of 2010: This is Zambia's principal AML/CFT legislation. While it is the foundational law, it does not specifically address virtual assets or VASPs. Finding an official, up-to-date government-published link can be challenging, but it forms the basis of the Financial Intelligence Centre's (FIC) operations.

Caution and Warnings: The Bank of Zambia consistently advises against the use of cryptocurrencies due to risks and their unregulated status.

Bank of Zambia Statement on Virtual Assets (May 2022): https://www.boz.zm/media/media_releases/2022/STATEMENT%20ON%20VIRTUAL%20ASSETS.pdf

FIC Zambia Website (for Annual Reports): https://www.fic.gov.zm/