Eritrea

## Report: Retail Cryptocurrency Trading Status in Eritrea

**Topic:** Retail_Trading_Status
**Description:** Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).
**Date of Report:** April 13, 2025

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### 1. Current Status:

**Banned**

### 2. Narrative Explanation:

The status of retail cryptocurrency trading in Eritrea is categorized as **Banned**. While there appears to be no specific legislation explicitly naming and prohibiting cryptocurrencies like Bitcoin, the existing, highly restrictive financial and regulatory environment effectively prevents Eritreans from legally participating in cryptocurrency trading.

Eritrea's financial system is characterized by:
*   **State Control:** The financial sector is small, underdeveloped, and dominated by state-owned banks. Private banking is prohibited, and the Bank of Eritrea (the central bank) exerts significant control over all financial operations. [6, 8, 10]
*   **Strict Foreign Exchange Controls:** The government maintains tight control over foreign currency. The national currency, the Nakfa (ERN), is non-convertible. [5, 8] Accessing foreign currency, which is typically required to purchase cryptocurrencies on international exchanges, is severely restricted for ordinary citizens.
*   **Limited Infrastructure:** Eritrea suffers from poor internet connectivity and electricity supply, both of which are heavily regulated by the government. [3] Modern banking infrastructure like ATMs or online banking is largely absent, and the economy remains predominantly cash-based. [3, 5, 6]
*   **Lack of Specific Crypto Regulation:** There is no specific legal or regulatory framework addressing cryptocurrencies in Eritrea. [2, 3, 4] While some sources might interpret this lack of specific regulation as meaning crypto is "legal but unregulated," [3] in Eritrea's tightly controlled environment, activities not explicitly permitted, especially those involving foreign exchange or operating outside state-controlled financial channels, are generally considered prohibited.
*   **AML/CFT Framework:** Eritrea has Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) laws (Proclamation No. 175/2014). [12] Cryptocurrency transactions, often perceived as high-risk for illicit activities, would likely fall under scrutiny within this existing framework, further hindering legal participation.

**Conclusion:** Engaging in retail cryptocurrency trading typically requires access to international online exchanges, foreign currency, and reliable internet – all of which are heavily restricted or unavailable to the general population in Eritrea due to strict government controls over the financial system, foreign exchange, and digital infrastructure. The absence of specific permissive regulations, combined with these stringent controls and the overall state-dominated, non-transparent financial environment, creates a situation where retail cryptocurrency trading is practically and legally impossible, thus constituting an effective ban.

### 3. Supporting Excerpts from Sources:

*   **On Lack of Specific Regulation & Status:**
    *   "There is no cryptocurrency regulation. Eritrea. Undecided. No legal status for cryptocurrencies." (Proelium Law LLP Cryptocurrency Regulation Tracker) [2]
    *   "There is no regulation of cryptocurrencies in Eritrea. However, they are legal. The government's stance on crypto has been cautious but not restrictive like other African nations. ... The absence of regulation has created a gray area leaving businesses and individuals who utilize and patronize these digital assets at their peril." (UPay Blog - *Note: While this source claims legality, the overall context of Eritrean financial controls contradicts this interpretation for practical purposes*) [3]
    *   "Eritrea's tax regime for cryptocurrencies is still in its nascent stages, with no specific laws or regulations explicitly addressing the taxation of digital assets." (Heavnn University) [4]
    *   "The legality of bitcoin and other cryptocurrencies in Eritrea is currently unknown." (Bitrawr) [7]

*   **On Financial System Control & Restrictions:**
    *   "The Eritrean financial sector is small, undeveloped and offers only a limited range of financial services. The financial sector is controlled by state-owned banks... The government also exerts strict control over the use of foreign currency." (Making Finance Work for Africa - MFW4A) [5]
    *   "Eritrea's financial sector is underdeveloped and operates under a centralized banking system dominated by state-owned institutions... The economy remains largely informal, with limited access to modern banking services, and private banking is prohibited." (Open Banking Registry) [6]
    *   "The nonconvertible nature of the country's currency (nakfa), however, and a prohibition of foreign ownership and investment in the country, is a major roadblock..." (Centre for Affordable Housing Finance in Africa - CAHF) [8]
    *   "All banks with the exception of the Housing and Commercial Banks are under state ownership..." (Wikipedia - Banking in Eritrea) [10]

*   **On Infrastructure Limitations:**
    *   "Poor internet and electricity supply, government policies, and lack of legal framework are affecting crypto adoption." (UPay Blog) [3]
    *   "The connection is still limited and heavily regulated by the government who keeps a close eye on activities that happen in such places. ... A limited and regulated internet will continue to limit the adoption of crypto in Eritrea." (UPay Blog) [3]

*   **On AML/CFT:**
    *   "As a member state of the Financial Action Task Force (FATF) and the Eastern and Southern Africa Anti Money Laundering Group (ESAAMLG). Eritrea has implemented KYC/AML regulations in line with international standards." (Smile Identity) [12]
    *   "The primary legislation governing KYC/AML in Eritrea is The Anti-Money Laundering and Combating Financing of Terrorism Proclamation No. 175/2014." (Smile Identity) [12]

### 4. Source URLs:

1.  **Proelium Law LLP Cryptocurrency Regulation Tracker:** `https://www.cryptocurrencyregulation.com/` (Accessed via search results [2])
2.  **UPay Blog - Eritrea:** `https://blog.upay.up.exchange/crypto-in-eritrea/` (Accessed via search results [3])
3.  **Heavnn University - Cryptocurrency Taxes in Eritrea:** `https://heavnn.university/guides/cryptocurrency-taxes-in-eritrea/` (Accessed via search results [4])
4.  **Making Finance Work for Africa (MFW4A) - Eritrea:** `https://mfw4a.org/country/eritrea` [5]
5.  **Open Banking Registry - Eritrea:** `https://openbanking.registry.global/directory/eritrea` [6]
6.  **Bitrawr - Buy Bitcoin in Eritrea:** `https://www.bitrawr.com/buy-bitcoin/eritrea` [7]
7.  **Centre for Affordable Housing Finance in Africa (CAHF) - Eritrea:** `https://housingfinanceafrica.org/countries/eritrea/` [8]
8.  **Wikipedia - Banking in Eritrea:** `https://en.wikipedia.org/wiki/Banking_in_Eritrea` [10]
9.  **Smile Identity - Eritrea:** `https://usesmileid.com/countries/eritrea` [12]