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Benin

Retail_Trading_Status

Gray-Zone Unknown
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Analysis ID
#340
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Created
2025-06-26 12:46
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Executive Summary

Retail cryptocurrency trading in Benin exists in a "Gray-Zone," as there are no explicit laws banning it, but no specific regulations licensing or overseeing it either. The Central Bank of West African States (BCEAO) has warned against crypto risks. Benin's AML/CFT law (Law No. 2024-01) now covers VASPs. Crypto is taxed as an intangible asset but is not legal tender, creating ambiguity that pushes activity toward unregulated channels.

Key Pillars

  • The primary regulator in the region is the Central Bank of West African States (BCEAO), which has issued warnings against the risks associated with cryptocurrencies and prohibits banks from dealing in them.
  • At the national level, 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.
  • Core compliance requirements include AML/CFT obligations for Virtual Asset Service Providers (VASPs), including registration/licensing requirements and customer due diligence (KYC), as mandated by Law No. 2024-01 of 20 February 2024.
  • There is no dedicated licensing or SRO membership required for retail cryptocurrency trading beyond the AML/CFT scope for VASPs.

Landmark Laws

  • Law No. 2024-01 of 20 February 2024: Transposes the UEMOA Directive on Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) into Beninese national law. It includes Virtual Asset Service Providers (VASPs) within its scope, subjecting them to AML/CFT obligations, including registration/licensing requirements and customer due diligence (KYC).

Considerations

  • Cryptocurrencies are classified as intangible assets under Benin's tax law, similar to stocks or bonds.
  • Gains from selling or exchanging cryptocurrencies are subject to capital gains tax, and income from mining is subject to income tax.
  • Regulators warn against the risks associated with cryptocurrencies, including volatility and potential use in illicit activities.
  • 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.

Notes

  • There is no explicit legal prohibition against individuals buying, selling, or holding cryptocurrencies, but there is no specific regulatory framework in place to license and oversee these activities directly.
  • The BCEAO concedes it has not particularly communicated on the issue because these virtual currencies are not admitted in the zone.
  • 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.
  • The government of Benin issued a Communiqué, undated but referencing cryptoassets, to address the issue of legal or natural persons collecting significant capital through public offerings without being approved for this purpose by the competent authorities, asking them to immediately cease their operations of illegal collection of funds.

Detailed Explanation

The status of retail cryptocurrency trading in Benin is best described as a "Gray-Zone." While there is no explicit legal prohibition against individuals buying, selling, or holding cryptocurrencies, there is also no specific regulatory framework in place to license and oversee these activities directly. The regulatory environment is characterized by strong warnings from regional and national authorities, primarily the BCEAO (Central Bank of West African States) and the Beninese Ministry of Economy and Finance. The BCEAO, the central bank for the UEMOA (West African Economic and Monetary Union) zone of which Benin is a member, has consistently warned against the risks associated with cryptocurrencies, emphasizing their volatility, use in illicit activities, and lack of legal tender status. This stance effectively creates an "implicit ban" for the formal financial sector, discouraging banks and licensed financial institutions from dealing in or promoting crypto-assets, thereby pushing retail activity outside regulated channels.

Nationally, Benin has 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 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. 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. Benin's tax authorities treat cryptocurrencies as intangible assets, with gains from selling or exchanging cryptocurrencies subject to capital gains tax, and income from activities like mining subject to income tax under the General Tax Code. This implies a level of tolerance or acknowledgment of the activity for tax purposes, but it does not equate to formal legal recognition or regulation of the trading activity itself.

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. 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. As such, 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.

Summary Points

Retail Cryptocurrency Trading Status in Benin: Regulatory Analysis

I. Overall Regulatory Status:

  • Gray-Zone: Retail cryptocurrency trading (buying, selling, holding) exists in a legal gray area.
    • No explicit ban on individuals owning or trading cryptocurrencies.
    • No specific regulatory framework licensing and overseeing these activities directly.
    • Characterized by warnings, application of existing financial regulations (AML/CFT), and lack of legal recognition.

II. Key Regulatory Bodies and Their Roles:

  • Central Bank of West African States (BCEAO):
    • The central bank for the West African Economic and Monetary Union (UEMOA), of which Benin is a member.
    • Has consistently warned against the risks associated with cryptocurrencies (volatility, illicit activities, lack of legal tender status).
    • Prohibits banks and licensed financial institutions within the UEMOA from dealing in or promoting cryptocurrencies.
  • Beninese Ministry of Economy and Finance:
    • Has issued public warnings against investing in cryptocurrencies, highlighting schemes promising unrealistic returns and operating without proper authorization.
  • Benin Tax Authorities:
    • Treat cryptocurrencies as intangible assets for tax purposes.
    • Gains from selling or exchanging cryptocurrencies are subject to capital gains tax.
    • Income from activities like mining is subject to income tax.

III. Important Legislation and Regulations:

  • UEMOA Directive on Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT):
    • Transposed into Beninese national law (Law No. 2024-01 of 20 February 2024).
    • Includes Virtual Asset Service Providers (VASPs) within its scope.
    • Subjects VASPs to AML/CFT obligations, including registration/licensing requirements and customer due diligence (KYC).
  • General Tax Code:
    • Governs the taxation of cryptocurrencies as intangible assets.

IV. Requirements for Compliance:

  • For Virtual Asset Service Providers (VASPs):
    • Registration/licensing with relevant authorities.
    • Compliance with AML/CFT regulations, including KYC procedures.
  • For Individuals:
    • Report cryptocurrency transactions to tax authorities.
    • Pay capital gains tax on profits from selling or exchanging cryptocurrencies.
    • Pay income tax on income from activities like mining.

V. Notable Restrictions or Limitations:

  • Lack of Legal Tender Status: Cryptocurrencies are not recognized as legal tender in Benin.
  • Restrictions on Financial Institutions: Banks and licensed financial institutions within the UEMOA are prohibited from dealing in or promoting cryptocurrencies.
  • Absence of Specific Regulation: No dedicated legislation specifically permits, licenses, or regulates retail cryptocurrency trading or the operation of crypto exchanges beyond the AML/CFT scope.
  • Warnings and Risks: Public warnings from authorities about the risks of investing in cryptocurrencies, including potential financial loss and involvement with unregulated or illicit schemes.

VI. Recent Developments or Changes:

  • Law No. 2024-01 (February 20, 2024): Transposition of the UEMOA Directive on AML/CFT into Beninese law, explicitly including VASPs within its scope.
  • Ongoing Public Warnings: Continued issuance of public warnings by the Beninese Ministry of Economy and Finance regarding the risks of investing in cryptocurrencies.

Full Analysis Report

Report on the Current Status of Retail Cryptocurrency Trading in Benin

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 Benin operates in a space that can best be described as "Allowed-UnRegulated." While there are no specific laws explicitly prohibiting or comprehensively regulating the buying, selling, or holding of cryptocurrencies by individual citizens and residents, the official stance remains cautious, and the regulatory landscape is still evolving.

Benin is a member of the West African Economic and Monetary Union (WAEMU) and, as such, is subject to the directives of the Central Bank of West African States (BCEAO). The BCEAO has historically expressed concerns about cryptocurrencies, highlighting their volatility and potential risks. In the past, the BCEAO has indicated that it does not recognize cryptocurrencies as legal tender and has cautioned against their use. The legal tender in Benin, as in other WAEMU member states, remains the CFA franc (FCFA), and any promotion of cryptocurrencies as a substitute for traditional money is considered illegal.

Despite the lack of specific crypto-focused regulations, the purchase and sale of cryptocurrencies via the internet are not explicitly prohibited. This absence of a direct ban allows individuals to engage in cryptocurrency activities. However, this occurs in an environment where no tailored regulatory framework for investor protection, licensing of exchanges, or specific operational guidelines for crypto-asset service providers has been established.

There are indications that the regulatory approach is under development. Benin is reportedly collaborating with the Economic Community of West African States (ECOWAS) and other WAEMU members to create policies for virtual assets, aiming to align with international financial laws and address risks such as money laundering and fraud.

While specific crypto regulations are absent, general financial laws and regulations related to anti-money laundering (AML) and combating the financing of terrorism (CFT) are in place in Benin. Law No. 2018-16 on the prevention and repression of money laundering and the financing of terrorism, along with relevant BCEAO/WAEMU directives, mandates financial institutions and Designated Non-Financial Businesses and Professions (DNFBPs) to implement AML/CFT measures, including customer due diligence (CDD) and suspicious transaction reporting (STR). It is implied that these general AML/KYC requirements would extend to any entities facilitating cryptocurrency transactions if they fall under the definition of a financial institution or DNFBP, though specific application to crypto platforms is not yet clearly defined in dedicated crypto legislation.

Tax authorities in Benin have reportedly issued guidance indicating that cryptocurrencies are generally treated as intangible assets for tax purposes. Income derived from cryptocurrency activities and capital gains from their sale or exchange are subject to existing income tax and capital gains tax regulations. This suggests an acknowledgement of cryptocurrency transactions within the existing fiscal framework, even without specific trading regulations.

Various online platforms and exchanges facilitate cryptocurrency trading for Beninese residents, indicating that individuals are actively participating in the crypto market. However, users may face challenges such as the lack of direct support for the local currency (XOF) on major exchanges and potential restrictions from local banks on transactions related to cryptocurrency purchases.

In summary, individuals in Benin are not legally barred from trading cryptocurrencies. However, this activity takes place without a specific regulatory framework designed for cryptocurrencies. The government and regional bodies like the BCEAO maintain a cautious stance, and future regulations are anticipated. Existing general financial laws, particularly concerning AML/CFT and taxation, are applicable.

3. Specific, Relevant Text Excerpts:

  • WTS Global (April 2, 2025): "In Benin, the regulation of cryptocurrencies is an evolving subject. There are no specific rules for cryptocurrencies."
  • UPay Blog (December 5, 2024): "The legal status of cryptocurrencies is a little complicated in Benin; although there isn't a specific law governing them, they are generally allowed."
  • UPay Blog (December 5, 2024): "There is no clear law concerning cryptocurrency in the Benin Republic. However, ECOWAS is currently putting into place some regulatory guidelines pertaining to digital assets that might have an effect on what position the country will take in the future concerning cryptocurrency."
  • UPay Blog (December 5, 2024): "Being a member of the West African Economic and Monetary Union, legal tender in Benin is still the CFA franc (FCFA), and any promotion of cryptocurrencies as a substitute for traditional money is considered illegal."
  • Proelium Law LLP (Website, accessed June 2025, information may be older): Regarding Benin, under "Legal Status": "Cryptocurrency is not a legal currency and is not authorised for use as a means of payment of goods and services. However, purchase and sale of cryptocurrencies through the internet is not prohibited."
  • Heavnn University (March 29, 2024): "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."
  • Smile ID (Website, accessed June 2025, information may be older): "AML/KYC regulations in Benin are enforced by a number of regulators including the Cellule Nationale de Traitement des Informations Financières (CENTIF), and the Banque Centrale des Etats de l'Afrique de l'Ouest (BCEAO). The primary KYC/AML regulation in Benin is the Law on the Prevention and Repression of Money Laundering and the Financing of Terrorism in Benin (Law No. 2018-04)." This highlights the existing general AML framework.

4. Direct, Accessible URL Links to Specific Sources:

Web Sources (9)

Sources discovered via web search grounding

Search queries used (6)
  • current status of retail cryptocurrency trading in Benin 2025
  • Benin cryptocurrency laws and regulations 2025
  • Banque Centrale des États de l'Afrique de l'Ouest (BCEAO) cryptocurrency stance 2025
  • Are individuals in Benin allowed to buy and sell cryptocurrencies?
  • KYC/AML regulations for cryptocurrency platforms in Benin 2025
  • Official statements from Benin government or central bank on crypto trading 2025
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