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Madagascar

Retail_Trading_Status

Allowed-Unregulated Unknown
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Status Changed

Previous status: Banned

The primary justification for the difference in analysis results, from "Banned" in the previous analysis to "Allowed-Unregulated" in the new analysis, stems from a combination of more recent source information and a nuanced interpretation of the Central Bank of Madagascar's (BCM) official communications and the overall regulatory landscape. 1. **Interpretation of Central Bank Warnings:** The previous analysis heavily relied on the BCM's October 2021 communiqué. It interpreted the BCM's warnings about risks, the lack of legal tender status for cryptocurrencies, and the absence of regulation for service providers as constituting an effective ban. The rationale was that by highlighting severe risks and not providing a legal framework, the BCM was implicitly prohibiting retail trading. The new analysis, while acknowledging these same warnings (some reiterated in a March 2022 BCM report cited by John W Ffooks & Co and recent blogs like UPay), interprets them differently. It views these warnings as cautionary measures advising public prudence rather than an outright legal prohibition. Sources from late 2024 and early 2025 (e.g., UPay Blog, UEEx Technology, Traders Union) explicitly state that while unregulated and risky, cryptocurrency trading is not illegal in Madagascar. This suggests a shift from "activity is dangerous and unregulated, therefore banned" to "activity is dangerous and unregulated, therefore proceed at your own risk but it's not forbidden." 2. **Recency and Nature of Sources:** The new analysis incorporates more current sources, with some dating as recently as April/June 2025. These newer sources (UPay Blog, UEEx Technology, Traders Union) directly address the legality and status, concluding that trading is allowed despite the lack of specific regulation. For instance, UPay Blog (Dec 2024) states, "it has not placed an outright ban on trading or holding cryptocurrencies," and UEEx Technology (Apr 2025) notes, "Madagascar does not have specific regulations for crypto exchanges, but trading is allowed." The previous analysis relied significantly on the 2021 BCM statement and a 2022 legal firm's interpretation which, while valid at the time, might not capture the evolving understanding or practical reality reflected in later commentaries. 3. **Absence of Explicit Prohibition:** The new analysis places greater emphasis on the fact that no specific law explicitly bans cryptocurrency trading. In many legal systems, activities not expressly forbidden are considered permissible, albeit potentially unregulated. The previous analysis inferred a ban from the BCM's strong cautionary stance and its exclusive mandate over legal tender. The new analysis leans towards the principle that without a direct prohibition, the activity falls into an unregulated category. 4. **Evolution of Regulatory Understanding/Observation:** The passage of time between the two analyses (the previous one heavily rooted in 2021-2022 information, the new one incorporating 2024-2025 perspectives) may reflect a period where the initial strong warnings from the BCM did not translate into active enforcement against individual retail trading, leading to a de facto "allowed but unregulated" environment. The newer sources seem to reflect this observed reality. 5. **Nuance in "No Regulation":** Both analyses agree there's no specific crypto regulation. However, the previous analysis saw this void, coupled with BCM warnings, as creating a prohibitive environment. The new analysis sees this void as simply meaning the activity is not formally recognized or overseen, but not necessarily illegal. The mention of general AML/CFT laws in the new analysis (Law No. 2018-043) acknowledges an existing financial regulatory framework, but one that is not crypto-specific, further supporting the "unregulated" aspect rather than "banned." 6. **Indications of Government Exploration:** The new analysis mentions reported partnerships (Ministry of Commerce) and CBDC explorations (e-Ariary) by the BCM. While these do not directly legalize or regulate private retail cryptocurrency trading, they might signal a less hostile or purely prohibitive stance from the government, lending more credence to an "allowed-unregulated" status rather than an outright ban. This suggests an environment of observation or cautious exploration rather than active suppression. In summary, the shift in status is primarily due to more recent information and a different interpretative lens applied to the BCM's stance. While the BCM remains cautious and has not established a regulatory framework, the newer analysis concludes that this caution and lack of regulation do not equate to an explicit legal ban on individuals buying, selling, or holding cryptocurrencies, leading to the "Allowed-Unregulated" determination. The previous analysis took a more conservative view, equating strong warnings and lack of legal recognition with an effective prohibition.

Analysis ID
#335
Version
Archived
Created
2025-06-26 09:21
Workflow Stage
Initial Research

Executive Summary

As of June 2025, retail cryptocurrency trading in Madagascar is in an "Allowed-Unregulated" state. The Banky Foiben'i Madagasikara (BFM) has not banned cryptocurrencies but has issued general warnings about the risks. There is no specific legal framework for cryptocurrency exchanges or taxation, although general AML/CFT laws such as Law No. 2018-043 of 2019 may apply. The government is exploring digital assets, including a potential central bank digital currency (CBDC) called the e-Ariary.

Key Pillars

The primary regulator is the Banky Foiben'i Madagasikara (BFM), which has adopted a cautious stance issuing warnings but not outright bans. There are no specific crypto licensing or registration requirements. General AML/CFT laws, such as Law No. 2018-043 of 2019, enforced by the Central Bank of Madagascar and the Financial Intelligence Unit (Cellule de Renseignement Financier - CRF, also referred to as SAMIFIN), may apply to larger crypto-related businesses.

Landmark Laws

Law No. 2018-043 of 2019: This is Madagascar's Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Law. While not crypto-specific, it could potentially apply to larger or more formalized crypto-related businesses for general financial crime prevention.

Considerations

Cryptocurrencies operate in a legal gray area, lacking explicit prohibitions or endorsements. The Central Bank of Madagascar has issued warnings to the public regarding the risks associated with digital assets, such as fraud and market volatility. There are no specific restrictions on leverage, mandates to use local exchanges, or deposit insurance schemes tailored for cryptocurrency holdings. The Malagasy government is exploring the potential of a central bank digital currency (CBDC) called the e-Ariary.

Notes

A report by John W Ffooks & Co (April 28, 2022) indicated that Madagascar had not adopted any laws or regulations on cryptocurrency at that time, with no visibility for when this might happen. Cryptocurrency trading occurs in Madagascar despite the lack of specific regulation, with individuals accessing global exchanges. The market is in its early stages with potential for growth, but users operate in an environment with limited consumer protection and legal clarity directly related to cryptocurrencies. The Ministry of Commerce has reportedly partnered with a cryptocurrency exchange for custody and advanced services.

Detailed Explanation

As of June 2025, retail cryptocurrency trading in Madagascar is categorized as "Allowed-Unregulated," indicating the absence of specific laws either prohibiting or governing the buying, selling, or holding of cryptocurrencies by individuals. While not formally recognized or regulated, this activity isn't explicitly illegal. The Banky Foiben'i Madagasikara (BFM), the Central Bank of Madagascar, has refrained from imposing a ban on cryptocurrencies but has adopted a cautious approach, issuing public warnings regarding the risks associated with digital assets, including potential fraud and market volatility, as highlighted in a UPay Blog post on December 8, 2024.

Currently, there is no dedicated legal framework in Madagascar that addresses cryptocurrency exchanges or the taxation of cryptocurrency-related income. Although general commercial and financial laws may broadly apply, they do not specifically address the unique characteristics of digital currencies. According to UEEx Technology on April 29, 2025, operating or using crypto exchanges isn't explicitly illegal, but there is no formal legal framework overseeing such activities. This absence of specific crypto-focused regulations translates to no official licensing requirements for cryptocurrency exchanges operating in or catering to Malagasy residents. Similarly, there are no specific KYC/AML (Know Your Customer/Anti-Money Laundering) or CTF (Counter-Terrorist Financing) requirements tailored for cryptocurrency transactions or service providers.

However, existing general AML/CFT laws, such as Law No. 2018-043 of 2019, are in place and enforced by bodies like the Central Bank of Madagascar and the Financial Intelligence Unit (Cellule de Renseignement Financier - CRF, also referred to as SAMIFIN), according to Smile ID (accessed June 2024). While these laws aren't crypto-specific, entities involved in financial transactions, potentially including larger or more formalized crypto-related businesses if they emerge, could fall under their purview for general financial crime prevention. Some international exchanges offering services in Madagascar may implement their own KYC/AML procedures based on international standards.

The Malagasy government has demonstrated some interest in the potential of digital assets, as evidenced by a reported partnership between the Ministry of Commerce and a cryptocurrency exchange for custody and advanced services. Additionally, the Central Bank of Madagascar has reportedly been studying the possibility of issuing a central bank digital currency (CBDC) called the e-Ariary, although this is distinct from private cryptocurrencies. Despite the lack of specific regulation, cryptocurrency trading does occur in Madagascar, with individuals accessing global exchanges. According to Traders Union (June 7, 2025), cryptocurrencies operate in a legal gray area, with no explicit prohibitions or endorsements. The market is considered to be in its early stages but with potential for growth. Users, however, operate in an environment with limited consumer protection and legal clarity directly related to cryptocurrencies.

Summary Points

Retail Cryptocurrency Trading Status in Madagascar (June 2025)

1. Overall Regulatory Status:

  • Allowed-Unregulated: Retail cryptocurrency trading (buying, selling, holding) is permitted but not formally regulated.

2. Key Regulatory Bodies:

  • Banky Foiben'i Madagasikara (BFM) / Central Bank of Madagascar:
    • Has not banned cryptocurrencies.
    • Issued general warnings to the public regarding the risks of cryptocurrencies (fraud, volatility).
    • Studying the possibility of issuing a Central Bank Digital Currency (CBDC) called the e-Ariary.
  • Cellule de Renseignement Financier (CRF) / SAMIFIN / Financial Intelligence Unit:
    • Enforces general AML/CFT laws.

3. Legislation and Regulations:

  • No specific cryptocurrency-focused legislation exists.
  • General Commercial and Financial Laws: May apply broadly but do not address unique aspects of digital currencies.
  • Law No. 2018-043 of 2019 (AML/CFT Law):
    • Primary legislation governing KYC/AML in Madagascar.
    • Not crypto-specific but could apply to larger crypto-related businesses.

4. Compliance Requirements:

  • No official licensing requirements for cryptocurrency exchanges.
  • No specific KYC/AML/CTF requirements tailored for cryptocurrency transactions or service providers.
  • General AML/CFT Compliance: Entities involved in financial transactions (potentially including crypto businesses) may fall under general AML/CFT laws.
  • International Exchanges: Some international exchanges operating in Madagascar may implement their own KYC/AML procedures based on international standards.

5. Restrictions and Limitations:

  • Lack of Consumer Protection: Limited consumer protection and legal clarity directly related to cryptocurrencies.
  • Legal Gray Area: Cryptocurrencies operate in a legal gray area, with no explicit prohibitions or endorsements.
  • No Deposit Insurance: Madagascar does not offer deposit insurance schemes tailored for cryptocurrency holdings.
  • No restrictions on leverage or mandates to use local exchanges exclusively.

6. Recent Developments and Changes:

  • Cautious Stance by Central Bank: BFM has adopted a cautious stance, issuing warnings but not banning crypto.
  • Government Interest: Reported partnership between the Ministry of Commerce and a cryptocurrency exchange for custody and advanced services.
  • CBDC Exploration: Central Bank of Madagascar is studying the possibility of issuing a CBDC (e-Ariary).
  • Market Growth: Cryptocurrency trading occurs in Madagascar, with individuals accessing global exchanges, indicating potential for growth.

Full Analysis Report

Report on the Retail Trading Status of Cryptocurrencies in Madagascar

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:

As of June 2025, retail cryptocurrency trading in Madagascar is considered Allowed-Unregulated. This means that while there are no specific laws or regulations explicitly prohibiting or governing the buying, selling, or holding of cryptocurrencies by individual citizens and residents, the activity is not formally recognized or regulated by the Malagasy authorities.

The Central Bank of Madagascar (Banky Foiben'i Madagasikara - BFM) has not issued a ban on cryptocurrencies but has adopted a cautious stance. It has issued general warnings to the public regarding the risks associated with digital assets, such as fraud and market volatility. This indicates an awareness of the growing sector but a reluctance to formally integrate it into the regulated financial system or to explicitly outlaw it.

There is no specific legal framework in Madagascar dedicated to cryptocurrency exchanges or the taxation of cryptocurrency-related income. While general commercial and financial laws may apply in a broad sense, they do not address the unique aspects of digital currencies. The absence of specific crypto-focused regulations means there are no official licensing requirements for cryptocurrency exchanges operating in or catering to Malagasy residents, nor are there specific KYC/AML (Know Your Customer/Anti-Money Laundering) or CTF (Counter-Terrorist Financing) requirements tailored for cryptocurrency transactions or service providers.

However, existing general AML/CFT laws, such as Law No. 2018-043 of 2019, are in place and enforced by bodies like the Central Bank of Madagascar and the Financial Intelligence Unit (Cellule de Renseignement Financier - CRF, also referred to as SAMIFIN). While these laws are not crypto-specific, entities involved in financial transactions, potentially including larger or more formalized crypto-related businesses if they emerge, could fall under their purview for general financial crime prevention. Some international exchanges offering services in Madagascar may implement their own KYC/AML procedures based on international standards.

The Malagasy government has shown some interest in the potential of digital assets. For instance, there has been a reported partnership between the Ministry of Commerce and a cryptocurrency exchange for custody and advanced services, suggesting a move towards exploring the integration of digital assets into the country's financial ecosystem. Additionally, the Central Bank of Madagascar has reportedly been studying the possibility of issuing a central bank digital currency (CBDC) called the e-Ariary, though this is distinct from private cryptocurrencies.

Despite the lack of specific regulation, cryptocurrency trading does occur in Madagascar, with individuals accessing global exchanges. The market is considered to be in its early stages but with potential for growth. Users, however, operate in an environment with limited consumer protection and legal clarity directly related to cryptocurrencies.

3. Specific, Relevant Text Excerpts:

  • UPay Blog (December 8, 2024): "As of now, Madagascar has not established specific laws or regulations to govern cryptocurrency. The country's central bank, the Banky Foiben'i Madagasikara (BFM), has not issued guidance on crypto beyond a general warning to the public. In a recent statement, BFM cautioned citizens about the risks associated with digital assets, citing potential issues like fraud and market volatility. However, it has not placed an outright ban on trading or holding cryptocurrencies."
  • UPay Blog (December 8, 2024): "This means that, while crypto is not illegal in Madagascar, it remains unregulated, and users must proceed cautiously due to the lack of consumer protections and legal clarity."
  • UEEx Technology (April 29, 2025): "Madagascar has not enacted specific laws or regulations governing cryptocurrency exchanges. While operating or using crypto exchanges isn't explicitly illegal, there is no formal legal framework to oversee such activities."
  • UEEx Technology (April 29, 2025): "Key Takeaways. Madagascar does not have specific regulations for crypto exchanges, but trading is allowed."
  • John W Ffooks & Co (April 28, 2022): "Madagascar has still not adopted any laws or regulations on cryptocurrency. There is no visibility for when this could happen. A short report on cryptocurrency dated 14 March 2022 published on the website of the Banky Foiben'i Madagasikara (the Central Bank of Madagascar, or BFM) – which covers a couple of points (e.g., the definition of cryptocurrency, how a cryptocurrency-related transaction works, etc.). In this communiqué, the Central Bank (i) confirms that cryptocurrencies are not regulated in Madagascar, (ii) warns the public of risks associated to cryptocurrencies and (iii) recommends the public to exercise caution when involved in cryptocurrency-related activities."
  • Proelium Law LLP (undated, accessed June 2024): Under Madagascar, states: "Undecided. No legal status for cryptocurrencies; There is no cryptocurrency regulation." (Note: While the source uses "Undecided," the supporting details align with an "Allowed-Unregulated" status as per the provided definitions).
  • Traders Union (June 7, 2025): "Consequently, cryptocurrencies operate in a legal gray area, with no explicit prohibitions or endorsements. There are no specific restrictions on leverage or mandates to use local exchanges exclusively. Additionally, Madagascar does not offer deposit insurance schemes tailored for cryptocurrency holdings."
  • Smile ID (undated, accessed June 2024): "The primary legislation governing KYC/AML in Madagascar is Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Law n°2018-043, 2019." (This refers to general AML/CFT laws, not crypto-specific ones).

4. Direct, Accessible URL Links to Sources:

Web Sources (10)

Sources discovered via web search grounding

Search queries used (5)
  • current status retail cryptocurrency trading Madagascar
  • Madagascar cryptocurrency laws and regulations 2024 2025
  • Central Bank of Madagascar cryptocurrency stance
  • Are cryptocurrency exchanges legal in Madagascar?
  • KYC/AML regulations for crypto in Madagascar
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