Lebanon

Okay, here is the comprehensive report on the current status of retail cryptocurrency trading in Lebanon, structured as requested.
## Report: Retail Cryptocurrency Trading Status in Lebanon

**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)

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### 1. Identified Status:

**Gray-Zone**

### 2. Narrative Explanation:

The status of retail cryptocurrency trading (buying, selling, holding) for individual citizens and residents in Lebanon falls into a **Gray-Zone**. This is because while there are no specific laws explicitly prohibiting individuals from owning, using, or trading cryptocurrencies, the central bank (Banque du Liban - BDL) has issued strong warnings against their use and has prohibited licensed financial institutions from engaging with them. This creates a complex and ambiguous regulatory environment.

**Historical Context and BDL Stance:**
*   Banque du Liban was one of the first central banks in the Middle East to address cryptocurrencies, issuing a warning in December 2013 about the risks associated with "virtual money" or "cybercurrencies," particularly Bitcoin. These risks included lack of regulation, potential for illicit activities (money laundering, terrorism financing), volatility, and lack of legal protection or recourse for users.
*   In February 2018, the Capital Markets Authority (CMA) explicitly prohibited licensed financial institutions in Lebanon from issuing, marketing, or trading cryptocurrencies for their own account or on behalf of clients. This effectively cuts off the formal banking sector from direct involvement in crypto transactions.
*   The BDL Governor, Riad Salameh, has repeatedly expressed opposition to unregulated cryptocurrencies like Bitcoin, citing threats to consumers and the payment system. Although the BDL has explored launching its own central bank digital currency (CBDC), this is distinct from allowing decentralized cryptocurrencies.

**Lack of Specific Legislation:**
*   Despite the warnings and restrictions on financial institutions, Lebanese law does not explicitly ban the ownership, use, or trade of cryptocurrencies by individuals.
*   The Electronic Transactions and Personally Identifiable Data Law mentions "digital and electronic money" vaguely but does not provide clear regulation for decentralized cryptocurrencies like Bitcoin. It primarily grants the BDL authority to regulate such instruments.
*   This absence of specific legislation means that individual peer-to-peer (P2P) trading or holding of cryptocurrencies exists in a legal vacuum, neither expressly permitted nor prohibited by statute for citizens themselves.

**Impact of the Financial Crisis:**
*   Lebanon's severe economic and banking crisis since 2019 has significantly influenced the *de facto* situation. With the collapse of the traditional banking sector, extreme currency devaluation, and informal capital controls ("Lollars"), many Lebanese citizens have turned to cryptocurrencies, particularly stablecoins like USDT (Tether), as an alternative means to preserve value, transact, receive remittances, and bypass banking restrictions.
*   This has led to a boom in an informal, unregulated crypto market, often operating through over-the-counter (OTC) brokers and P2P networks, existing largely outside the formal financial system and BDL's direct oversight.

**AML/KYC Considerations:**
*   Because regulated crypto exchanges cannot easily operate within Lebanon due to the BDL/CMA stance against financial institution involvement, formal crypto-specific KYC/AML requirements *on platforms* are largely non-existent within the country.
*   General Lebanese AML/CFT laws (like Law No. 44 of 2015) apply broadly, and any transactions touching the formal financial system would be subject to standard due diligence. However, much of the current crypto activity, especially P2P and OTC cash transactions, bypasses these formal channels.
*   OTC brokers may implement their own varying levels of KYC, but this is not standardized or mandated by specific crypto regulations.

**Conclusion:**
The situation is a "Gray-Zone" because individual possession and P2P trading are not illegal *per se* under current law, yet the official stance from the central bank and financial regulators is strongly negative, and formal financial institutions are banned from participation. This forces activity into informal channels, driven significantly by the ongoing economic crisis, operating without specific crypto regulations or robust consumer protection frameworks. While not explicitly banned for individuals, it is officially discouraged and operates outside the regulated financial sphere.

### 3. Relevant Text Excerpts:

*   **On the lack of explicit prohibition for individuals:** "Consequently, the Lebanese laws do not prohibit the ownership, use, trade of cryptocurrencies, but when it comes to their acceptance as a payment method, regulations only adopt legal tenders/fiat currencies." (Source: Lebanese Army Website - Analysis on Regulating Cryptocurrencies)
*   **On BDL warnings and restrictions on institutions:** "On December 19, 2013, the Banque du Liban (BDL), the Lebanese Central Bank, issued a notice to the country's banks and financial institutions warning them of the dangers of using cybercurrencies, especially bitcoin." (Source: Library of Congress / Freeman Law)
*   **On CMA prohibition for financial institutions:** "The CMA prohibited licensed financial institutions in Lebanon from issuing or marketing electronic money or cryptocurrencies, as well as from trading cryptocurrencies for their own account or on behalf of other parties." (Source: Byblos Bank Economic Research referencing CMA Announcement 30, Feb 2018)
*   **On the "Gray-Zone" status:** "The latter warnings have sparked a mix up with the terms “e-money” and digital currencies in general and have put Lebanon in the legal grey zone of regulations." (Source: Lebanese Army Website - Analysis on Regulating Cryptocurrencies)
*   **On the practical situation due to crisis:** "In this context, the decentralized, private nature of cryptocurrencies is incredibly attractive. They exist outside of the formal financial system and thrive on the black market which defines contemporary Lebanon... In upscale districts of Beirut, over-the-counter traders serve as an extension of informal money changing systems... that can accept cash and convert that into a cryptocurrency held within a digital wallet, and vice-versa." (Source: Carnegie Endowment for International Peace)
*   **On the legality for citizens vs institutions:** "Bitcoin is fully legal to be used by citizens. It is banned to be used by financial institutions. There is no legal action that can be taken against you." (Source: Bitcoin in Lebanon - *Note: While stating "fully legal" might be an oversimplification given the gray zone, it highlights the distinction between citizen activity and institutional bans.*)
*   **On lack of specific tax laws but classification:** "Lebanon's tax regime for cryptocurrencies is still in its nascent stages, with no specific laws or regulations explicitly addressing the taxation of digital assets... the Ministry of Finance stated that cryptocurrencies should be treated as 'intangible assets' for tax purposes." (Source: Heavnn University - Crypto Taxes in Lebanon)

### 4. Source URLs:

1.  **Lebanese Army Website (Analysis on Regulating Cryptocurrencies):**
    *   URL: `https://www.lebarmy.gov.lb/en/content/regulating-cryptocurrencies-dilemma-reaching-consensus` (Archived/General analysis reflecting the gray zone)
2.  **Carnegie Endowment for International Peace (Crypto Mining in Lebanon):**
    *   URL: `https://carnegieendowment.org/sada/87913` (Provides context on crypto use during the crisis)
3.  **Library of Congress (Regulation of Cryptocurrency Around the World - referencing BDL 2013 warning):**
    *   URL: `https://www.loc.gov/law/help/cryptocurrency/world-survey.php` (Search within document for Lebanon) or `https://tile.loc.gov/storage-services/service/ll/llglrd/2018298380/2018298380.pdf` (Page 86)
4.  **Freeman Law (Lebanon and Cryptocurrency - referencing BDL 2013 warning & 2017 statements):**
    *   URL: `https://freemanlaw.com/lebanon-and-cryptocurrency/`
5.  **Byblos Bank (Economic Research - referencing CMA 2018 prohibition):**
    *   URL: `https://www.byblosbank.com/en/LebanonThisWeek/CMA-prohibits-usage-of-cryptocurrencies-by-financial-institutions`
6.  **Bitcoin in Lebanon (Informal site summarizing status):**
    *   URL: `https://bitcoinlebanon.org/bitcoin-in-lebanon/`
7.  **Heavnn University (Crypto Taxes in Lebanon):**
    *   URL: `https://heavnn.university/crypto-taxes-in-lebanon/`
8.  **Cicada Wallet (Business perspective on legality):**
    *   URL: `https://cicada.finance/blog/how-to-use-crypto-as-a-company-in-lebanon`
9.  **DL News (Report on OTC brokers):**
    *   URL: `https://www.dlnews.com/articles/people-culture/lebanons-crypto-brokers-dodge-turmoil-to-serve-clients/`

*(Note: Direct links to specific BDL circulars are often difficult to find publicly accessible online without navigating the BDL's main site structure, which can change. The references provided through secondary reputable sources like the Library of Congress, Freeman Law, and Byblos Bank accurately reflect the content and dates of these official communications.)*