THE LACK OF A REGULATORY REGIME ON CRYPTO CURRENCY IN CAMEROON

Definition of terms

1. Crypto currency

Crypto currency is an encrypted virtual or digital money. It is designed to work as an instrument of exchange. Cryptography techniques are used to generate units of currency, secure and verify transactions.

Crypto currencies operate independently from Central Banks. Eventually, it serves as ordinary money such as Dollars or Euros but has no physical equivalents (i.e. bank notes or coins that are physical). Crypto currency exists only in electronic form.

Examples of crypto currencies are; Bitcoin, Esthereum, Ripple etc.

2. Electronic money (e-money)

Electronic money is fiat money stored in an electronic form which is used to effect electronic financial transactions. In other words, it is a monetary value that is stored in an electronic form.

3. Fiat currency

Fiat currency is national currency issued by the Central bank or country’s government like FCFA, Euro, and Dollar etc.

4. Platform/Wallet

This is a digital marketplace where Users can buy, sell and store crypto currency.

5. User

A person who uses the crypto currency platform/wallet and effects transactions in crypto currency.

I) REGULATION OF CRYTO CURRENCY IN CAMEROON

1)      The ownership of crypto currency and the use of platforms/wallets

As at now, the Economic and Monetary Community of Central Africa (CEMAC) has not issued any regulation on the use of crypto currencies in the CEMAC zone. However, due to the fast growth of the use of crypto currencies worldwide, we hope for such a regulation in the near future. Also, at the national level, there is no specific legislation which has been enacted to regulate crypto currencies.

Hereby, there are no regulations or laws which might prohibit any User in the CEMAC zone from owning crypto currency and using the Platform/wallet.

2)      The buying and selling of crypto currency with fiat money

Crypto currencies are bought and sold using fiat currency mostly through electronic transactions (using e-money).

These transactions will include a User buying a crypto currency with fiat currency through an e-money payment or selling crypto currency to be paid with fiat currency through and e-money transaction.

Electronic money transactions are regulated in the CEMAC zone by the CEMAC Exchange Control regulation and CEMAC regulations on electronic money transactions. These regulations determines who is authorized to issue, effect payment services, lays down the conditions and limits of e-money transactions:

·         Regulation N° 01/11/CEMAC/UMAC/CM on the activity of issuing electronic money

·         Regulation of 21 December 2018 relating to payment services in the CEMAC zone

·         The CEMAC Exchange Control Regulation

·      BEAC Instruction N° 008/GR/2019 laying down the conditions for the use of electronic money instruments out of the CEMAC Zone

a.      Who is authorized to issue and effect electronic money transactions?

Article 3 of Regulation N° 01/11/CEMAC/UMAC/CM on the activity of issuing electronic money précises that only credit establishments are entitled to practice the activity of electronic money issuance. Furthermore, Article 3(6) of Regulation of 21 December 2018 relating to payment services in CEMAC also qualifies payment services eligible to practice the activity of electronic money issuance.

From the above, it can be confirmed that only credit establishments (e.g. banks, micro finance institutions, etc.) and payment services (e.g. Orange Money, MTN Mobile Money, Express Union Mobile Money etc.) are authorized to effect e-money transactions.

Consequently, all e-money transactions for the purchase and sale of crypto currency using fiat currency must be done through credit establishments or payment services.

b.      How are external e-money transactions payments effected?

The settlement of external transactions is regulated by the 2018 CEMAC Exchange Regulation in its articles 29 to 35.

External transactions are settled through correspondent banks in one of the currencies of both partners or in any other currency accepted by both parties to the transaction.

Furthermore, the settlement of external transactions is carried out exclusively through credit institutions. To this end, transactions between two resident entities cannot be settled through bank accounts domiciled abroad.

External transactions carried out with electronic payment instruments are treated the same way as transfers and manual exchange.

Settlements of external transactions as from a certain amount are declared to the Central Bank and the competent administrative authorities. A BEAC Instruction lays down the conditions and procedures for the declaration of external transfers.

From the above, it can be perceived that settlement of external e-money transactions must be done through credit institutions or payment services and from a certain amount, must be declared to BEAC and the competent administrative authority (which is the Minister of Finance)

II) LEGAL SITUATION OF CRYPTO CURRENCY IN CAMEROON

As seen above, until a specific regulation, law or guidance is enacted, there is no legal restriction whatsoever for Cameroonians to own crypto currencies or operate transactions on platforms/wallets.

On a corporate point of view, this is positive news. Companies dealing will crypto currencies do not fall under a regulated regime and carry out their activities law free at least till a specific regulation, law or guidance is enacted.

Nevertheless, there is a certain control of the use of crypto currency which comes in at the level of the purchase and sale of crypto currency with fiat currency. fiat money transactions  are regulated by law which is most importantly for purposes of preventing money laundry and terrorist financing. There are certain limits on the amount of money which could be transferred. Prior declaration must be made to the Central Bank in events where these limits are passed.

The Cameroonian government has once shown interest in crypto currency in a test which was conducted in 2015 in collaboration with an Indian Information and Technology company in a crypto-currency called Trest. Consequently, due to the interest of the government and the fast growing rate of the use of crypto currency, we are hoping for a legal text on crypto currency can in the nearest future.  

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