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Lesotho

Retail_Trading_Status

Allowed-Unregulated Unknown
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Status Changed

Previous status: Allowed-UnRegulated

Okay, as a specialized financial regulatory analyst, here's a detailed breakdown of the changes that occurred in the analysis result for Retail_Trading_Status in Lesotho, comparing the "Previous Analysis" (dated April 13, 2025) with the "New Analysis" (dated June 26, 2025). **Overall Summary of Changes:** The **Identified Current Status** remains **"Allowed-Unregulated"** in both reports. However, the "New Analysis" provides more recent and specific evidence, particularly from the Central Bank of Lesotho (CBL) and national strategic documents, which refines the understanding of the regulatory landscape and future intentions. While the core conclusion hasn't shifted, the supporting arguments are updated and strengthened, and new nuances regarding future regulatory direction and specific prohibitions (like unlicensed promotion) are highlighted. **Detailed Changes in Analysis Result:** 1. **Recency and Specificity of Central Bank of Lesotho (CBL) Guidance:** * **Previous Analysis:** Relied heavily on a CBL Press Statement from November 9, 2017, and general references to CBL warnings. * **New Analysis:** Introduces and prominently features a more recent **CBL Press Statement dated May 20, 2024**. This new statement: * Reiterates that cryptocurrencies are outside the CBL's regulatory scope and users have no recourse. * Re-emphasizes warnings about potential violations of tax, exchange control, and AML/CFT laws. * Crucially, it explicitly states that **promoting cryptocurrencies as investment opportunities violates Sections 27 and 28 of the Central Bank of Lesotho Capital Market Regulations of 2014** (requiring investment advisors to be licensed). This specific legal reference for prohibiting *promotion* is a stronger and more direct point than in the previous analysis. 2. **Introduction of National Strategic Documents and Future Outlook:** * **Previous Analysis:** Mentioned government interest in blockchain but lacked concrete evidence of planned regulatory development for cryptocurrencies. * **New Analysis:** Incorporates the **Lesotho National Financial Inclusion Strategy 2024-2028 (dated October 14, 2022, referencing a 2023 AML/CFT assessment)**. This document is a significant addition as it: * Explicitly identifies the lack of regulation for virtual assets and virtual asset providers as a "key gap" and a "significant deficiency" found in a 2023 AML/CFT assessment. * States a "Proposed policy action" to "Develop frameworks for the regulation and supervision of virtual assets and virtual asset providers, including AML/CFT/PF aspects." * This provides concrete evidence of an official intention to move towards regulation, a detail absent in the previous report. 3. **Updated Supporting Sources and Excerpts:** * **Previous Analysis:** Used sources like Kotigi.com (Oct 2024), Carlos Maiz Blog (Jan 2025), and UPay Blog (Dec 2024) which, while recent, are less official. The Afriwise source was dated Mayet & Associates (implicitly older than the new Afriwise citation). * **New Analysis:** * Features an updated **Afriwise article dated May 3, 2025**, providing more current legal commentary. * Includes a new source, **UEEx Technology (April 30, 2025)**, which comments on the operational status of crypto exchange providers (legal to operate but not officially recognized). * The UPay Blog source is also updated with a more specific URL. * The direct PDF link to the **CBL's November 9, 2017 statement** is now provided, enhancing verifiability. * The new CBL statement (May 20, 2024) and the National Financial Inclusion Strategy are now primary supporting documents. 4. **Refined Narrative on Specific Aspects:** * **Promotion of Crypto:** The new analysis is more definitive about the illegality of *promoting* crypto investments without a license, citing specific regulations from the May 2024 CBL statement. The previous report mentioned this as "problematic" but the new one offers a stronger legal basis. * **Crypto Exchanges:** The new analysis adds a specific point about crypto exchange providers being "legal to operate" but not officially recognized, based on the UEEx Technology source. * **Contextual Details:** The new analysis adds context about "growing interest in cryptocurrencies in Lesotho, particularly for remittances and savings, given the country's reliance on migrant worker income." 5. **Handling of Contradictory Information (IMF Reports):** * **Previous Analysis:** Included a detailed "Reconciliation Note" to address contradictory IMF reports from 2022 and 2024 that suggested a ban. * **New Analysis:** Still acknowledges the 2022 IMF report but handles the contradiction more concisely within the main narrative, stating that "more recent sources from 2024 and early 2025 indicate that cryptocurrency is 'unregulated but not banned'." The emphasis is now more strongly on the prevailing evidence supporting non-regulation. 6. **Clarity on Legal Definitions:** * Both reports state that cryptocurrencies do not fall under the legal definition of securities or legal tender. The new analysis reiterates this, supported by the updated Afriwise excerpts and CBL statements. **Impact of Changes:** While the fundamental status of "Allowed-Unregulated" remains unchanged, the "New Analysis" provides a more robust, current, and nuanced understanding. The key impacts are: * **Stronger Evidentiary Basis:** The inclusion of the May 2024 CBL statement and the National Financial Inclusion Strategy provides more authoritative and recent evidence. * **Clearer Future Trajectory:** The National Financial Inclusion Strategy signals a clear governmental intent to develop a regulatory framework, which was only speculative before. * **More Specific Prohibitions:** The illegality of promoting crypto investments without a license is more clearly articulated with direct reference to capital market regulations. * **Enhanced Confidence in the "Allowed-Unregulated" Status:** Despite contradictory older reports (like the IMF 2022 one), the newer and more specific evidence further solidifies the current non-banned but unregulated status for holding and trading, while highlighting the risks and lack of specific protections. In essence, the "New Analysis" doesn't overturn the previous findings but significantly updates and substantiates them, offering a clearer view of both the present situation and potential future developments in Lesotho's cryptocurrency landscape.

Analysis ID
#257
Version
Archived
Created
2025-06-26 09:16
Workflow Stage
Initial Research

Executive Summary

Retail cryptocurrency trading in Lesotho is currently allowed but unregulated. The Central Bank of Lesotho (CBL) has not banned cryptocurrencies but has issued warnings about the associated risks, stating they are not legal tender and fall outside its regulatory purview. Key legislation like the Financial Institutions Act, 2012, does not explicitly cover cryptocurrency transactions. The Lesotho National Financial Inclusion Strategy 2024-2028 acknowledges the need to develop frameworks for virtual assets, suggesting potential future regulation.

Key Pillars

The primary regulator is the Central Bank of Lesotho (CBL), which has expressed concerns but has not banned cryptocurrency trading. Core compliance requirements such as AML/CFT, tax, and exchange control laws may apply to cryptocurrency transactions, even though no specific crypto regulations exist. There are currently no specific licensing or registration requirements for cryptocurrency exchanges or traders, but investment advisors promoting crypto investments must be licensed under the Central Bank of Lesotho Capital Market Regulations of 2014.

Landmark Laws

  • Financial Institutions Act, 2012: This law regulates financial institutions but does not explicitly cover cryptocurrency transactions.
  • Central Bank of Lesotho Act: Does not grant the CBL direct authority to oversee cryptocurrency activities, as cryptocurrencies do not fit the legal definition of securities under current regulations.
  • Central Bank of Lesotho Capital Market Regulations of 2014: Requires investment advisors to be licensed by the Central Bank of Lesotho, applicable to those promoting crypto investments.
  • Lesotho National Financial Inclusion Strategy 2024-2028 (October 14, 2022): Acknowledges the need to develop frameworks for the regulation and supervision of virtual assets and virtual asset providers, including AML/CFT aspects.

Considerations

Cryptocurrencies are not legal tender in Lesotho and fall outside the CBL's regulatory purview. The CBL has warned that participation in virtual currencies could lead to violations of existing AML/CFT laws, tax laws, and exchange control laws. There are risks associated with the lack of recourse to the Central Bank in the event of losses from cryptocurrency transactions. The Lesotho National Financial Inclusion Strategy 2024-2028 highlights the need to develop frameworks for regulation and supervision of virtual assets and virtual asset providers.

Notes

An IMF report from November 2022 listed Lesotho as one of six sub-Saharan African countries that had banned crypto, but more recent sources from 2024 and early 2025 indicate that cryptocurrency is "unregulated but not banned". The Central Bank of Lesotho (CBL) issued a press statement on November 9, 2017, warning the public that it does not oversee, supervise, or regulate cryptocurrencies. The Lesotho AML/CFT assessment done in 2023 found a significant deficiency, and there is an urgent need for regulation to be introduced. There is growing interest in cryptocurrencies in Lesotho, particularly for remittances and savings, given the country's reliance on migrant worker income. The government has shown some interest in exploring blockchain technology for economic development and digital financial services.

Detailed Explanation

Retail cryptocurrency trading in Lesotho is currently in an "Allowed-Unregulated" state as of June 26, 2025. While not explicitly prohibited, the sector operates without specific crypto-focused regulations. Individuals can buy, sell, and hold cryptocurrencies, but existing financial laws related to AML/CFT, tax, and exchange control may apply, creating potential legal risks. The Central Bank of Lesotho (CBL) has not issued a ban but has expressed significant concerns and issued warnings, highlighting that cryptocurrencies are not legal tender and fall outside the CBL's regulatory purview. Consequently, individuals engaging in cryptocurrency transactions have no recourse to the Central Bank in the event of losses. Key legislation like the Financial Institutions Act, 2012, does not explicitly cover cryptocurrency transactions, meaning crypto trading falls outside traditional financial regulation. Similarly, the Central Bank of Lesotho Act does not grant the CBL direct authority to oversee cryptocurrency activities.

The CBL has cautioned that participation in virtual currencies could lead to violations of existing AML/CFT laws, tax laws, and exchange control laws. Promoting crypto investment opportunities is also problematic, as investment advisors are required to be licensed under the Central Bank of Lesotho Capital Market Regulations of 2014. According to the CBL press statement on May 20, 2024, cryptocurrencies do not fall under the purview of the regulatory scope of the Central Bank of Lesotho, and the public is warned to be cautious. The CBL also warned that the promotion or participation in virtual currencies may lead to violations of existing tax laws, exchange control laws, and anti-money laundering/combating of terrorist financing laws.

Despite the lack of specific regulation, there is growing interest in cryptocurrencies in Lesotho, particularly for remittances and savings. The government has also shown some interest in exploring blockchain technology. The Lesotho National Financial Inclusion Strategy 2024-2028, dated October 14, 2022, acknowledges the need to develop frameworks for the regulation and supervision of virtual assets and virtual asset providers, including AML/CFT aspects, highlighting this as a key gap. A 2023 AML/CFT assessment found a significant deficiency, indicating an urgent need for regulation.

While crypto exchange providers can operate in Lesotho, the government does not officially recognize them, and there is no specific legal framework governing their operations. Users are therefore advised to be cautious. An IMF report from November 2022 listed Lesotho as one of six sub-Saharan African countries that had banned crypto. However, more recent sources from 2024 and early 2025 indicate that cryptocurrency is "unregulated but not banned" and that "there is no clear legal basis to classify cryptocurrency trading as illegal in Lesotho". The Central Bank's own statements consistently warn about risks and lack of regulatory oversight rather than an outright ban. Afriwise (May 3, 2025) notes that while not explicitly prohibited, cryptocurrency trading may still present legal risks and that individuals must be cautious, as they may inadvertently breach tax, AML, and exchange control laws. The UPay Blog (December 8, 2024) reports that cryptocurrency is unregulated but not banned in Lesotho, creating opportunities for blockchain-based innovation. UEEx Technology (April 30, 2025) states that cryptocurrency exchange providers are legal to operate in Lesotho but are not recognized by the government, and there's no legal framework governing their operations.

Summary Points

Retail Trading Status of Cryptocurrencies in Lesotho (as of 2025-06-26)

Overall Status: Allowed-Unregulated - Retail cryptocurrency trading is permitted but lacks specific crypto-focused regulations.

1. Regulatory Bodies and Their Roles:

  • Central Bank of Lesotho (CBL):
    • Role: Primary financial regulator, but does not currently regulate cryptocurrencies.
    • Actions:
      • Has issued warnings about the risks associated with cryptocurrencies.
      • States cryptocurrencies are not legal tender and fall outside its regulatory purview.
      • Prohibits the promotion of crypto investments without a license under the Central Bank of Lesotho Capital Market Regulations of 2014.
      • Cautions that participation in virtual currencies could lead to violations of existing laws.
  • Government of Lesotho:
    • Role: Has shown some interest in exploring blockchain technology.
    • Actions: No formal regulatory framework for cryptocurrencies yet.

2. Key Legislation and Regulations:

  • Financial Institutions Act, 2012:
    • Does not explicitly cover cryptocurrency transactions.
    • Crypto trading falls outside traditional financial regulation.
  • Central Bank of Lesotho Act:
    • Does not grant the CBL direct authority to oversee cryptocurrency activities.
    • Cryptocurrencies do not fit the legal definition of securities under current regulations.
  • Central Bank of Lesotho Capital Market Regulations of 2014:
    • Requires investment advisors to be licensed by the Central Bank of Lesotho.
    • Promoters of crypto investments may be in violation of these regulations if they are not licensed.

3. Requirements for Compliance:

  • While no specific crypto regulations exist, individuals must comply with existing financial laws:
    • Anti-Money Laundering (AML) and Combating of Terrorist Financing (CFT) laws
    • Tax laws
    • Exchange control laws

4. Notable Restrictions or Limitations:

  • Lack of Legal Protection: Individuals engaging in cryptocurrency transactions have no recourse to the Central Bank in the event of losses.
  • Unregulated Exchanges: Crypto exchange providers can operate, but are not officially recognized, and there is no specific legal framework governing their operations.
  • Potential Legal Risks: Individuals may inadvertently breach tax, AML, and exchange control laws.
  • Promotion Restrictions: Promoting crypto investment opportunities requires a license under the Central Bank of Lesotho Capital Market Regulations of 2014.

5. Recent Developments or Changes:

  • Lesotho National Financial Inclusion Strategy 2024-2028: Acknowledges the need to develop frameworks for the regulation and supervision of virtual assets and virtual asset providers, including AML/CFT aspects. This suggests a potential move towards regulation in the future.
  • Shift in Perception: While an IMF report in 2022 listed Lesotho as having banned crypto, more recent sources (2024-2025) indicate that cryptocurrency is "unregulated but not banned."
  • Growing Interest: Increasing interest in cryptocurrencies for remittances and savings.

6. Sources:

Full Analysis Report

Retail Trading Status of Cryptocurrencies in Lesotho

Report Date: 2025-06-26

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 Current Status

Allowed-Unregulated

2. Detailed Narrative Explanation

Retail cryptocurrency trading in Lesotho is currently Allowed-Unregulated. While not explicitly prohibited, the sector operates without specific crypto-focused regulations. Individuals can buy, sell, and hold cryptocurrencies, but they do so in an environment where existing financial laws (such as those related to anti-money laundering, counter-terrorist financing, tax, and exchange control) may apply, creating potential legal risks for participants.

The Central Bank of Lesotho (CBL) has not issued a ban on cryptocurrencies but has expressed significant concerns and issued warnings about the risks associated with them. These warnings highlight that cryptocurrencies are not legal tender in Lesotho and fall outside the CBL's regulatory purview. Consequently, individuals engaging in cryptocurrency transactions have no recourse to the Central Bank in the event of losses.

Key legislation like the Financial Institutions Act, 2012, does not explicitly cover cryptocurrency transactions, meaning crypto trading falls outside traditional financial regulation. Similarly, the Central Bank of Lesotho Act does not grant the CBL direct authority to oversee cryptocurrency activities, as cryptocurrencies do not fit the legal definition of securities under current regulations.

The CBL has cautioned that participation in virtual currencies could lead to violations of existing laws, including:
* Anti-Money Laundering (AML) and Combating of Terrorist Financing (CFT) laws
* Tax laws
* Exchange control laws

Promoting crypto investment opportunities is also problematic, as investment advisors are required to be licensed under the Central Bank of Lesotho Capital Market Regulations of 2014.

Despite the lack of specific regulation, there is growing interest in cryptocurrencies in Lesotho, particularly for remittances and savings, given the country's reliance on migrant worker income. The government has also shown some interest in exploring blockchain technology for economic development and digital financial services. However, this interest has not yet translated into a formal regulatory framework for cryptocurrencies.

The Lesotho National Financial Inclusion Strategy 2024-2028 acknowledges the need to develop frameworks for the regulation and supervision of virtual assets and virtual asset providers, including AML/CFT aspects, highlighting this as a key gap. This suggests a potential move towards regulation in the future, but as of the current date, the retail trading environment remains largely unregulated from a crypto-specific standpoint.

While crypto exchange providers can operate in Lesotho, the government does not officially recognize them, and there is no specific legal framework governing their operations. Users are therefore advised to be cautious.

An IMF report from November 2022 listed Lesotho as one of six sub-Saharan African countries that had banned crypto. However, more recent sources from 2024 and early 2025 indicate that cryptocurrency is "unregulated but not banned" and that "there is no clear legal basis to classify cryptocurrency trading as illegal in Lesotho." The Central Bank's own statements consistently warn about risks and lack of regulatory oversight rather than an outright ban on holding or trading by individuals, though they do prohibit the promotion of crypto investments without a license. The prevailing understanding based on the latest available information is that individual participation is not illegal per se, but operates in a space devoid of specific rules and protections, while being subject to existing general financial laws.

3. Specific, Relevant Text Excerpts

  • Afriwise (May 3, 2025): "In Lesotho, cryptocurrency and other virtual assets are largely unregulated. However, a closer examination of the legal framework suggests that while cryptocurrency trading is not explicitly prohibited, it may still present legal risks... In conclusion, there is no clear legal basis to classify cryptocurrency trading as illegal in Lesotho. However, individuals involved in cryptocurrency transactions must be cautious, as they may inadvertently breach tax, AML, and exchange control laws."
  • Afriwise (May 3, 2025): "The Central Bank of Lesotho (“CBL”) has expressed concerns regarding the risks associated with cryptocurrencies. In an official statement, the CBL warned that cryptocurrency transactions could lead to violations of anti-money laundering (AML) and counter-terrorist financing laws, tax regulations, and exchange control laws. This suggests that while cryptocurrency itself is not banned, individuals engaging in its trade must ensure compliance with existing financial regulations."
  • Afriwise (May 3, 2025): "A key piece of legislation governing financial activities in Lesotho is the Financial Institutions Act, 2012. This law regulates both banking and non-banking financial institutions but does not explicitly cover cryptocurrency transactions. As a result, cryptocurrency trading falls outside the scope of traditional financial regulation. Similarly, the Central Bank of Lesotho Act and related regulations do not provide the CBL with direct authority to oversee cryptocurrency activities."
  • Central Bank of Lesotho (Press Statement, May 20, 2024): "Cryptocurrencies do not fall under the purview of the regulatory scope of the Central Bank of Lesotho and as such there shall be no recourse to the Bank in the event of losses. As such the members of the public are warned to be cautious."
  • Central Bank of Lesotho (Press Statement, May 20, 2024): "In other words, due to the nature of cryptocurrency transactions that do not require any disclosures, the public is warned that their promotion and or participation in virtual currencies may lead to violations of existing tax laws, exchange control laws and anti-money laundering/combating of terrorist financing laws which are prosecutable transgressions."
  • Central Bank of Lesotho (Press Statement, May 20, 2024, regarding status as an investment asset/security): "Members of the public are hereby warned that, by virtue of being offered as (financial) investment opportunities to the public, cryptocurrencies directly expose their promoters to violation of Sections 27 and 28 of the Central Bank of Lesotho Capital Market Regulations of 2014 that require investment advisers to be licensed by the Central Bank of Lesotho."
  • UPay Blog (December 8, 2024): "Cryptocurrency is unregulated but not banned in Lesotho, creating opportunities for blockchain-based innovation... No formal cryptocurrency regulations or local exchanges exist yet, but discussions around policies are ongoing."
  • UEEx Technology (April 30, 2025): "Cryptocurrency exchange providers are legal to operate in Lesotho. However, the government does not recognize them, and there's no legal framework governing their operations."
  • Lesotho National Financial Inclusion Strategy 2024-2028 (October 14, 2022, referencing a 2023 AML/CFT assessment): "One of the key gaps is in respect of virtual assets and virtual providers... The Lesotho AML/CFT assessment done in 2023 found a significant deficiency, and there is urgent need for regulation to be introduced. Proposed policy actions include: ... 4. Develop frameworks for the regulation and supervision of virtual assets and virtual asset providers, including AML/CFT/PF aspects."
  • Central Bank of Lesotho (Press Statement, November 9, 2017): "The Central Bank of Lesotho hereby notifies and warns the public that it does not oversee, supervise or regulate the cryptocurrencies, their systems, promoters or intermedi- aries. Any activities related to the acquisition, trading or use of cryptocurrencies is at the user's sole and indepen- dent risk."

4. Direct, Accessible URL Links to Sources

Web Sources (8)

Sources discovered via web search grounding

Search queries used (7)
  • Lesotho cryptocurrency regulation status 2024 2025
  • Central Bank of Lesotho cryptocurrency policy 2024 2025
  • Lesotho retail crypto trading laws and regulations
  • Lesotho AML KYC cryptocurrency requirements
  • Financial intelligence unit Lesotho cryptocurrency
  • Lesotho digital asset regulatory framework
  • News on cryptocurrency adoption and regulation in Lesotho 2024 2025
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