Benin

**Report on the Current Status of Retail Cryptocurrency Trading in Benin**

**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).

**1. Identified Status:** **Gray-Zone**

**2. Detailed Narrative Explanation:**

The status of retail cryptocurrency trading (buying, selling, holding) for individuals in Benin falls into a **Gray-Zone**. There is no explicit law banning individuals from owning or trading cryptocurrencies, nor is there a specific regulatory framework licensing and overseeing these activities directly. However, the environment is characterized by strong warnings from regional and national authorities, the application of existing financial regulations (particularly AML/CFT), and a lack of legal recognition for cryptocurrencies as legal tender or financial instruments.

*   **Regional Context (BCEAO and UEMOA):** Benin is a member of the West African Economic and Monetary Union (UEMOA), and its central bank is the Central Bank of West African States (BCEAO). The BCEAO has consistently warned against the risks associated with cryptocurrencies, emphasizing their volatility, use in illicit activities, and lack of legal tender status within the UEMOA zone. While the BCEAO has not explicitly banned the holding or trading of crypto-assets by individuals, its stance discourages their use and prohibits banks and licensed financial institutions within the UEMOA from dealing in or promoting them. This creates an "implicit ban" environment for the formal financial sector, pushing retail activity outside regulated channels.
*   **National Regulatory Actions:**
    *   **AML/CFT Framework:** Benin transposed the UEMOA Directive on Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) into national law (Law No. 2024-01 of 20 February 2024). This law now explicitly includes Virtual Asset Service Providers (VASPs) within its scope, subjecting them to AML/CFT obligations, including registration/licensing requirements and customer due diligence (KYC). While this regulates the *service providers*, it doesn't explicitly legalize or ban the underlying activity of *retail trading* itself but imposes controls on the intermediaries facilitating it.
    *   **Public Warnings:** The Beninese Ministry of Economy and Finance has issued public warnings against investing in cryptocurrencies, particularly highlighting schemes promising unrealistic returns and operating without proper authorization. These warnings focus on the risks of financial loss and illegal public solicitation of funds, often linked to crypto trading activities.
    *   **Taxation:** Benin's tax authorities treat cryptocurrencies as intangible assets. Gains from selling or exchanging cryptocurrencies are subject to capital gains tax, and income from activities like mining is subject to income tax under the General Tax Code. Taxpayers are required to report these transactions. This implies a level of tolerance or acknowledgement of the activity for tax purposes, but it does not equate to formal legal recognition or regulation of the trading activity itself.
*   **Lack of Specific Regulation:** Despite the application of AML/CFT laws to VASPs and the existence of tax rules, there is no dedicated legislation in Benin that specifically permits, licenses, or regulates the act of retail cryptocurrency trading or the operation of crypto exchanges beyond the AML/CFT scope. Cryptocurrencies are not recognized as legal tender or financial instruments under Beninese law.
*   **Ambiguity:** The combination of central bank warnings, the prohibition for formal financial institutions to engage with crypto, the application of AML/CFT rules to VASPs, tax requirements, and the absence of a clear legal framework permitting and regulating retail trading creates significant ambiguity. Individuals can technically acquire and hold crypto, often through offshore platforms or peer-to-peer methods, but they do so in an environment lacking specific legal protections or clear regulatory oversight, facing warnings about risks and potential involvement with unregulated or illicit schemes.

Therefore, while not explicitly banned for individuals, the activity exists in a complex environment with significant restrictions, warnings, and the application of indirect regulations (AML/CFT, Tax), fitting the definition of a **Gray-Zone**.

**3. Relevant Text Excerpts:**

*   **On Lack of Specific Regulation & Tax Treatment:** "Benin's tax regime for cryptocurrencies is still in its early stages of development, with no specific laws or regulations explicitly addressing the taxation of digital assets. However, the country's tax authorities have issued guidance indicating that cryptocurrencies are generally treated as intangible assets for tax purposes." (Source: Heavnn University, 2024-03-29)
*   **On Legal Status & Classification:** "Under Benin's tax law, cryptocurrencies are classified as intangible assets, similar to stocks, bonds, or intellectual property. This classification means that cryptocurrencies are not considered legal tender or currency in Benin." (Source: Heavnn University, 2024-03-29)
*   **On AML/CFT Regulation:** "Benin [...] has franchised an important step in the regulation of the activity of cryptocurrencies... Thus, the activity of Virtual Asset Service Providers (VASPs) is now subject to prior approval or authorization... To comply with the UEMOA Directive, this text is transposed into Beninese positive law by Law No. 2024-01 of February 20, 2024 relating to the fight against money laundering, the financing of terrorism and the proliferation of weapons of mass destruction in the Republic of Benin." (Source: KORIACTU, 2024-05-29, translated from French)
*   **On BCEAO Stance:** "The BCEAO concedes it has not particularly communicated on the issue because these virtual currencies are not admitted in the zone..." and highlights risks like volatility and money laundering. (Source: Financial Afrik, 2023-07-21, translated from French)
*   **On Public Warnings:** "It has come to my attention that legal or natural persons are collecting significant capital through public offerings without being approved for this purpose by the competent authorities... The declared reasons for these fundraising activities by said persons are online trading or trading in cryptoassets. To this end and while drawing the attention of the public... to the real risks of loss of their savings thus mobilized outside the regulations in force, the Minister of Economy and Finance... asks: the promoters and managers concerned: to immediately cease their operations of illegal collection of funds..." (Source: Benin Government Official Website, Communiqué, undated but referencing cryptoassets)
*   **On Implicit Ban Classification (Older View):** "Benin — Implicit ban" (Defined as prohibiting banks/financial institutions from dealing in crypto). (Source: Business Insider Africa, 2022-06-11) - *Note: This predates the 2024 AML law explicitly covering VASPs but reflects the ongoing restriction on the formal financial sector.*
*   **On Lack of Legal Status:** "In law, cryptocurrency is not considered a traditional currency... This legal aspect is lacking for cryptocurrency... the problem of legal qualification of cryptocurrency means that it is not a currency in the legal sense of the term. It is sometimes seen as digital gold, a right, a financial security... It is an intangible movable asset, an asset whose value is determined by a market mechanism." (Source: La Nation Benin, 2023-11-03, Interview with Dr. Julien Coomlan Hounkpè, translated from French)

**4. Source Links:**

*   **Heavnn University (Taxation):** `https://heavnn.university/guides/cryptocurrency-taxes-in-benin/` [2]
*   **KORIACTU (AML/CFT Law):** `https://koriactu.com/cryptomonnaies-comment-lactivite-est-regulee-au-benin-et-dans-luemoa/` [13]
*   **Benin Government (Public Warning):** `https://www.gouv.bj/actualite/1401/communique-portant-interdiction-operations-appel-public-epargne-certaines-personnes-physiques-morales-non-agreees/` [18]
*   **La Nation Benin (Legal Qualification):** `https://lanation.bj/economie/dr-julien-coomlan-hounkpe-specialiste-du-numerique-la-cryptomonnaie-nest-pas-une-monnaie-au-sens-juridique-du-terme` [16]
*   **Business Insider Africa (Implicit Ban Classification):** `https://africa.businessinsider.com/local/markets/bitcoin-ban-african-countries-where-crypto-is-restricted-or-illegal/1k9j46f` [4]
*   **Financial Afrik (BCEAO Stance):** `https://www.financialafrik.com/2023/07/21/cryptomonnaie-dans-lespace-uemoa-lavenir-des-transactions-entre-prives/` [8]
*   **Benin Treasury (Reference to BCEAO Communiqué):** `https://tresorbenin.bj/actualite/communique-de-la-bceao-relatif-aux-publicites-sur-les-cryptomonnaies-risques-encourus-par-les-populations-beninoises` [9]
*   **LABS-NS AVOCATS / CREPMF Stance (via CPCCAF):** `https://cpccaf.org/crypto-actifs-vers-une-reconnaissance-au-sein-de-la-cemac-et-de-luemoa-source-https-labs-ns-com/` [10] (Discusses regional regulator warnings)