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Cabo Verde

Retail_Trading_Status

Allowed-Regulated Unknown
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Analysis ID
#156
Version
Archived
Created
2025-04-12 06:51
Workflow Stage
Live

Executive Summary

Retail cryptocurrency trading in Cabo Verde is Allowed-Regulated, primarily through the regulation of Virtual Asset Service Providers (VASPs). The Banco de Cabo Verde (BCV) oversees these entities, enforcing Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements following Law No. 30/X/2023. This law mandates VASP registration and compliance with AML/CFT regulations. Cryptocurrencies are treated as assets, but the tax framework remains underdeveloped.

Key Pillars

The primary regulator is the Banco de Cabo Verde (BCV), responsible for AML/CFT supervision of VASPs. Core compliance requirements include AML/KYC/CDD for Virtual Asset Service Providers (VASPs). VASPs must register with the BCV before operating. No specific licensing regime directly governs individual retail investors, but they interact with regulated VASPs.

Landmark Laws

Law No. 30/X/2023, enacted on June 21, 2023, and effective the following day, regulates virtual asset services and digital banks. It mandates VASP registration with the Banco de Cabo Verde (BCV) and subjects VASPs to AML/CFT regulations.

Considerations

Cryptocurrencies are treated as assets, not legal tender. The taxation framework is underdeveloped, but gains may be subject to a 15% capital gains tax. The Banco de Cabo Verde (BCV) has raised concerns about the volatility and potential use of cryptocurrencies in illicit activities. Currency controls may limit official channels for exchanging cryptocurrencies for the Cabo Verde Escudo (CVE).

Notes

Before Law No. 30/X/2023, Cabo Verde's stance was observation and caution. The legal status of crypto trading was considered a "grey area." Sources mention the BCV issuing warnings about risks in 2018. The current legal framework regulates the service providers rather than the individual retail traders.

Detailed Explanation

The retail cryptocurrency trading status in Cabo Verde is Allowed-Regulated. There's no specific licensing for individual retail investors, but the environment is regulated through service providers (VASPs). Before June 2023, the Banco de Cabo Verde (BCV), the central bank, issued warnings about cryptocurrency risks, stating they aren't legal tender and can't be exchanged for the Cabo Verde Escudo (CVE) through official channels. The BCV primarily observed and cautioned, without explicit prohibitions on individuals holding or trading crypto assets. The enactment of Law No. 30/X/2023 on June 21, 2023, which came into force the following day, marked a change by addressing virtual asset services and digital banks. This law mandates that VASPs register with the BCV and comply with Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) regulations. VASPs must implement preventative measures, report suspicious transactions, and conduct customer due diligence (KYC). The BCV is responsible for regulating and supervising VASPs to ensure AML/CFT compliance. Although the law focuses on regulating service providers, it creates a regulated environment for retail traders, who are allowed to buy, sell, and hold cryptocurrencies. Cryptocurrencies are not considered legal tender and are generally treated as assets or property. The taxation framework for cryptocurrencies is underdeveloped, but gains may be subject to capital gains tax, potentially at the standard rate of 15%, though this lacks explicit legal confirmation. The mandatory registration and AML/CFT supervision of VASPs by the BCV means the ecosystem is no longer unregulated. Retail trading is permitted within an environment where the key intermediaries are subject to specific financial regulations, justifying the Allowed-Regulated status.

Summary Points

**Retail Cryptocurrency Trading Status in Cabo Verde: Regulatory Analysis (April 12, 2025)**

**I. Overall Regulatory Status:**

*   **Allowed-Regulated:** Retail cryptocurrency trading is permitted, but the ecosystem is regulated primarily through oversight of Virtual Asset Service Providers (VASPs).

**II. Key Regulatory Bodies and Their Roles:**

*   **Banco de Cabo Verde (BCV):**
    *   Central bank and primary regulatory authority for VASPs.
    *   Responsible for registering and supervising VASPs.
    *   Ensures VASP compliance with Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) regulations.
    *   Previously issued warnings about the risks of cryptocurrencies.

**III. Important Legislation and Regulations:**

*   **Law No. 30/X/2023 (June 21, 2023):**
    *   Key legislation regulating virtual asset services and digital banks.
    *   Brings entities engaged in virtual asset activities under regulatory oversight.
    *   Focuses on regulating service providers (VASPs) rather than individual traders directly.

**IV. Requirements for Compliance (Primarily for VASPs):**

*   **VASP Registration:** Entities providing virtual asset services must register with the BCV.
*   **AML/CFT Compliance:**
    *   Implement preventative measures against money laundering and terrorist financing.
    *   Identify and report suspicious transactions.
    *   Conduct Customer Due Diligence (CDD), implying Know Your Customer (KYC) requirements.
    *   Mitigate risks associated with money laundering and terrorist financing.
    *   Prepare AML/KYC policies, internal rules, and regulations.
    *   Verify customers, collect and store their personal data; constantly monitor all ongoing transactions.

**V. Notable Restrictions or Limitations:**

*   **Not Legal Tender:** Cryptocurrencies are not considered legal tender in Cabo Verde.
*   **BCV Warnings:** The BCV has issued warnings about the risks associated with virtual currencies, including volatility and potential for illicit use.
*   **Escudo Exchange Restriction:** Cryptocurrencies cannot be exchanged for the Cabo Verde Escudo (CVE) through official channels.

**VI. Recent Developments or Changes:**

*   **Enactment of Law No. 30/X/2023 (June 2023):** This law significantly shifted the regulatory landscape by regulating VASPs and bringing them under BCV supervision.
*   **Shift from "Grey Area":** Prior to Law 30/X/2023, the regulatory status was largely undefined. The new law establishes a regulated environment for crypto activities.

**VII. Taxation:**

*   **No Specific Crypto Tax Laws:** Cabo Verde lacks specific laws addressing cryptocurrency taxation.
*   **Asset Classification:** Cryptocurrencies are generally treated as assets or property for tax purposes.
*   **Potential Capital Gains Tax:** Gains from cryptocurrency transactions could be subject to capital gains tax under existing general tax principles.
*   **Uncertainty on Rate:** The applicable capital gains tax rate is not explicitly specified for crypto, but the general rate is reported as 15%.

Full Analysis Report

Report: Retail Cryptocurrency Trading Status in Cabo Verde

Date: April 12, 2025

Topic: Retail_Trading_Status

Description: This section assesses the legal and regulatory environment for individual citizens and residents in Cabo Verde concerning the buying, selling, and holding of cryptocurrencies. It details relevant regulations, including Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements imposed on platforms, and any official warnings issued.

1. Current Status: Allowed-Regulated

2. Detailed Narrative Explanation:

The status of retail cryptocurrency trading in Cabo Verde is best described as Allowed-Regulated. While there isn't a specific licensing regime directly governing individual retail investors trading cryptocurrencies for their own accounts, the legal framework established in June 2023 significantly regulates the environment in which these activities occur, primarily by targeting the service providers.

Historically, Cabo Verde lacked specific legislation addressing cryptocurrencies. The Banco de Cabo Verde (BCV), the central bank, had previously issued warnings regarding the risks associated with virtual currencies, noting their volatility and potential use in illicit activities, and clarifying they were not legal tender and could not be exchanged for the national currency, the Cabo Verde Escudo (CVE), through official channels [6, 9]. For years, the stance was largely one of observation and caution, with neither the government nor the BCV explicitly prohibiting or formally regulating the holding or trading of crypto assets by individuals [7, 10]. Some sources described the situation as a "grey area" or "undecided" [2, 4].

The regulatory landscape shifted significantly with the enactment of Law No. 30/X/2023 on June 21, 2023, which came into force the following day [8]. This law specifically addresses the provision of services related to virtual assets and the establishment of digital banks [2, 8]. Crucially, it brings entities engaged in activities with virtual assets within the scope of regulatory oversight, particularly concerning Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) [8, 5].

Key aspects of this regulation include:

  • VASP Regulation: The law mandates that entities providing services involving virtual assets (Virtual Asset Service Providers - VASPs) must register with the Banco de Cabo Verde (BCV) prior to operating [8]. This includes exchanges and potentially other platforms facilitating crypto transactions.
  • AML/CFT Compliance: Registered VASPs are subject to AML/CFT laws and regulations. They are obligated to implement preventative measures, identify and report suspicious transactions, conduct customer due diligence (implying KYC requirements), and mitigate risks associated with money laundering and terrorist financing [8, 11].
  • BCV Supervision: The Banco de Cabo Verde is designated as the competent authority responsible for regulating and supervising these entities to ensure compliance with AML/CFT obligations [8, 5].

While Law 30/X/2023 focuses on regulating the service providers rather than the individual retail traders, this framework effectively creates a regulated environment. Individuals are allowed to buy, sell, and hold cryptocurrencies [4], but they will increasingly interact with VASPs that are supervised by the BCV and required to implement KYC/AML procedures.

Cryptocurrencies are not considered legal tender in Cabo Verde [4, 6]. They are generally treated as assets or property [4, 12]. The taxation framework for cryptocurrencies remains underdeveloped, with no specific laws addressing crypto taxation. However, it is generally assumed that gains from cryptocurrency transactions could be subject to capital gains tax under existing general tax principles, likely at the standard rate (reported as 15%), though this lacks explicit legal confirmation [12].

Therefore, while direct regulation of individual retail trading activity is absent, the mandatory registration and AML/CFT supervision of VASPs by the central bank means the ecosystem is no longer unregulated. Retail trading is permitted within an environment where the key intermediaries are subject to specific financial regulations, justifying the Allowed-Regulated status.

3. Specific Relevant Text Excerpts:

  • On the introduction of regulation for VASPs (2023): "Entities that intend to engage in activities with assets in Cape Verde have not been regulated or supervised, up to now, by any regulatory and supervisory authority of the national financial system... In this way, and also taking into account Recommendation 15 of the Financial Action Task Force... entities that engage in activities with virtual assets on national territory are now subject to compliance with the duties to prevent money laundering and terrorist financing. Banco de Cabo Verde is the national authority responsible for ensuring that these entities comply with the duties and obligations laid down in the laws and regulations regarding [AML/CFT]." (Source: VPQ Advogados Legal Alert [8])
  • On VASP Registration Requirement (2023): "Engaging in business activities with virtual assets will, from now on, be subject to prior registration with Banco de Cabo Verde." (Source: VPQ Advogados Legal Alert [8])
  • On BCV's Supervisory Role (IMF): Law 30/X/2023 gives "BCV the responsibility for regulation and supervision in matters of AML/CFT to entities that carry out activities with virtual assets." (Source: IMF eLibrary [5])
  • On the status before recent regulation (2021): "Cabo Verde. No [Legal Status]. No [Regulatory Framework]. No [AML/CFT Applied]. No [Tax Applied]. Alert from Bank of Cabo Verde, The Risk of Virtual Currency (Cryptocurrency), March 29, 2018, mentions that cryptocurrency cannot be exchanged for escudos (Cabo Verde's national currency), Item 3..." (Source: Law Library of Congress [6])
  • On current retail activity and asset status (circa late 2023/early 2024): "The legality of crypto trading is currently a grey area. However, Cabo Verdeians can trade, store, and invest in cryptocurrencies... Cape Verde hasn't enacted laws recognising cryptocurrencies as legal tender, but there are legal frameworks that regulate their use as assets." (Source: UPay Blog [4])
  • On AML/KYC for Crypto Businesses: As part of compliance to operate (even before explicit licensing was fully defined, implying general business/AML rules applied): "prepare AML/KYC policies, internal rules, and regulations to comply with international requirements for combating criminal money laundering and protecting transmitted client information... verify customers, collect and store their personal data; constantly monitor all ongoing transactions..." (Source: Prifinance Company [11])
  • On Taxation Uncertainty (2024): "Cabo Verde... has yet to establish a comprehensive legal framework for the taxation of cryptocurrencies... cryptocurrencies are generally treated as assets for tax purposes... taxation of cryptocurrency transactions in Cabo Verde is not explicitly addressed in the country's tax laws... it is likely that gains or profits realized from cryptocurrency transactions would be subject to capital gains tax... The applicable tax rate... is not specified... However, the general capital gains tax rate in Cabo Verde is 15%." (Source: Heavnn University [12])

4. Source URLs:

  • [2] Cryptocurrency Regulation Tracker: https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAJYVEzB76tgtYNC49stjt9EQfINfCv1OQm_Jmi3wZVtt-RTJovO1kgHS04L00dI6aU2_FSG6z3DQPllTHnRswFjXGkuXi0W6VI0P4rZoOK_XTyh3V4x3Lyaj_VEcVBiTo1KabVJ35hu_B9ttw_GzPBM (Note: Link generated by search tool, original source likely a legal or regulatory tracking website)
  • [3] Menos Fios (2022 News): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAKMsAzAVlDXJLVsbBEgVLdr6AR34Qq5D-5Jhjiko03D7rJqfS8ZyZJrtEFl7UdrO-8lWfnk8c_ZHxSUhvw-SErHT5QH5OPwJItbEcMR7nhfHLSZ-VLnrn8no7HjWev-2v00tWq6isCMO56f4HCDCwiF8PcGGtE2cTiTEhS4eOjD4blfV3vY (Note: Link generated by search tool, original source is Menos Fios news outlet)
  • [4] UPay Blog (Analysis): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAJpohcb3ELwKkr6XHz1V5KQ-8As4tAqLkxyI8PEaQBZrcC9cBj4TvnhD0bftbEYR5qC2gluvW-YfqNAHMmNl9zbzh3jWjpRhfZc7L6fW2Resmmc1eAKQv17kEZMaBKci_3Q1zYNUxy43XkXleRyqm7WnGVq (Note: Link generated by search tool, original source is UPay Blog)
  • [5] IMF eLibrary (Report): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAIt2NB1-2ndO1HrEy3BAz3shQKvn5x6EQRtWxvH1KPGr2w2_rWwyAH2DIRwYClFX4JfE9xPseyoCWH0O8wMdRTrS2hSjVQ3Q7NT0j0pUZ0IJR82iSb4dZdiXG71GroRiPSPKxyWgxYnTLkJdsSXjG8zPJ5DgogeNQ9_EBJ_xusrd4MZsCpdC-ueBEBCoRZA1SlKpc4= (Note: Link generated by search tool, points to an IMF report likely accessible via their eLibrary portal)
  • [6] Law Library of Congress (2021 Report): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAI0So6YQWe0mixakulDXjn41icOW3g9_2oSWEM3s_18cK0lNIubjv7SBHe0ZX95kPlCoZ-IO3lAblzwNjKaVQ2pObuAWqsm5RHwk9QnFZEeHUZDuNI9hf7O3T__JjD7Fmoob48d5G9qcmZa_2eYWiw0ZGmXKhKsKC9t2xR7Zj5AaCRTp3OOH9o= (Note: Link generated by search tool, original source is loc.gov)
  • [7] Crowdfund Insider (2018 Report citing Ecobank): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAI2J7yWZ-NntJRFIwFrwnVL1LRkVQO8kpzUadry1oDEzOepLhzxm9tho6aDI0x9AgzuPyoy8jZS6uykD1o_xC2dMCteLU40JgMH6jsTWABt8yXDKS0kljhhywY0nbdj2LVCiuldKF_edhwD2o5KZjo5Pj87tjPsMz8kC-jO4BcxPZZ-vGo0aRksmbbT8yaPxA3mp_TbOqybOwCOVLFCq_wQB0NkTs4_Y84w_gy7Zit0k5XvEWWBN6t7FfDMuwpovmwK21cApzjhMA== (Note: Link generated by search tool, original source is Crowdfund Insider)
  • [8] VPQ Advogados (Legal Alert on Law 30/X/2023): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAJ--efcM1FD_O3Fj5CNx0U0-fDOTb_-pumctGe5yKCgWWmCxZC1jQlyZg1NHArRBZDYGKKyVpf4BZ9Rxf758MM_XDGu-CLcKCAfa9p1VIe5bnBqN_veTGFgyvJ4V5odBvccvh2kNNI_u9psEMONGnb7ph1PQNgJQFxgjDCKC95lrHBL7Fq070I3kI_dTArTpFCeHILp2053MUlwHjOCD0eZqFpA0ghpLR6ZB8zw5KNMIsBqNR3EykpmWlGW1U7VZmqyx7Gq2kRXCItLe1N4uMhRTvAR9oPoCzxbGipKE8uiVUzt39rZ_GjbGg== (Note: Link generated by search tool, original source is VPQ Advogados law firm)
  • [9] Banco de Cabo Verde (Payment System Report 2019): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAK4lIJMbbIEhYp8tpG8dghIkE941nm3t1G4yKpxtiVVIZkiUdZxMyXXsnbsCSDP6xRKR7qBXBsXzQRlzn-sRuJyqXZvTOGwvUFu_lejjJOLavxadjqpp8zmp234ecQpBlJ0EJRgNM7m6kc9p9TTGig6DZv9Dc699O6NrTEil95-0utqyorQWjlQAfmas6GqYJ46P3JKJ8oFysPdwMOU (Note: Link generated by search tool, original source likely BCV website publication section)
  • [10] Freeman Law (Analysis citing 2018 Ecobank): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqALN4GLnGiFS1mR_gkky809KnulNOLXhuJrfIsD_LwsDC1uytuJ2g3PTW0Eaezsa3oO6Oy37Z9PV7UKRgmekaIA2RetJz2Qphb50FFgXHBFkxI1K_QxlPjBxW7kz-fiWEAsBAkmFUJkx (Note: Link generated by search tool, original source is Freeman Law website)
  • [11] Prifinance Company (Business Setup Info): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAIgWcY4Gqbeaa_lJU0Xv9H09NBAZWaXG9fEdYSyDfUdPGlI94bZx_a6K3N6e5nd1bD4qLe76toxMnCCR0u_JtS2qzRql9L7f4zhVS98JsAcAx5swm7JKJ0_xahKfMIeFh_noJip8koWZ9NEppSWSqkQ-rA= (Note: Link generated by search tool, original source is Prifinance website)
  • [12] Heavnn University (Tax Analysis): https://vertexaisearch.cloud.google.com/grounding-api-redirect/AWQVqAJUp1HBaxcWsPSjqjLeFUlSQfeiB0_lkv4zp7J5nBjgxCDqbtTVeVEDrMiGjHCct1Nln35OmDWv6eIs0SRJ-Px0G08JQJA3WVTSoSyxQx7ovvS3D6iCVV0DPcv6h9UvYN8wrlY6szZ0-1GAWFw_N6WhiuneRl6u (Note: Link generated by search tool, original source is Heavnn University website/blog)

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