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Retail_Trading_Status

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2025-06-26 12:58
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Executive Summary

Retail cryptocurrency trading in Lebanon operates in a gray zone. While not explicitly illegal for individuals, the Banque du Liban (BDL) and Capital Markets Authority (CMA) have issued warnings and prohibited financial institutions from engaging in cryptocurrency transactions. This creates an ambiguous environment characterized by a lack of formal recognition and specific regulations for individuals. P2P trading is prevalent, acting as a workaround given the economic crisis, despite the lack of clear KYC/AML rules for these informal platforms.

Key Pillars

The primary regulator is the Banque du Liban (BDL), which has issued warnings about cryptocurrencies and prohibited financial institutions from engaging in crypto transactions. The Capital Markets Authority (CMA) also plays a role by prohibiting licensed financial institutions from issuing, marketing, or trading cryptocurrencies. There are no specific licensing or registration requirements for individuals trading crypto, particularly in the P2P space, but general AML laws like Law No. 44 of 2015 exist, and the Special Investigation Commission (SIC) is reportedly scrutinizing VASPs.

Landmark Laws

CMA Announcement 30 (February 2018): Prohibited licensed financial institutions (banks, exchanges, etc.) from issuing, marketing, or trading cryptocurrencies for their own account or on behalf of clients, citing a lack of regulatory frameworks, risks of volatility, and potential for illicit use.
Law No. 44 of 2015: General AML law; its application to the informal crypto sector is not well-defined.

Considerations

Cryptocurrencies are not legal tender in Lebanon. There is no clear framework for the taxation of crypto assets. The BDL and CMA have raised concerns about the lack of legal protection, speculative nature, volatility, and potential for use in criminal activities. Operationally, Lebanese citizens face strict capital controls and utilize cryptocurrencies, especially USDT, as a hedge against the devaluing Lebanese pound.

Notes

The situation in Lebanon is described as a 'practical tolerance' towards crypto operations due to their role in remittances and savings preservation amid the economic crisis. The BDL had previously mentioned plans for a CBDC in 2017 and 2020 (aiming for a 2021 launch), but its status is currently unclear. Sources indicate that while no formal legalization had occurred by 2024-2025, agencies adopted this 'practical tolerance.' P2P trading is prevalent, particularly through informal channels like OTC markets and Telegram groups. It's important to note the lack of direct links to laws explicitly permitting or banning individual retail crypto trading; the situation is a gray zone defined by warnings and restrictions on financial institutions alongside widespread P2P activity.

Detailed Explanation

Lebanon's retail cryptocurrency trading status is best described as a 'Gray-Zone.' While there is no outright ban on individuals buying, selling, or holding cryptocurrencies, the regulatory environment is ambiguous, marked by official warnings and restrictions on financial institutions. The Banque du Liban (BDL), the central bank, first issued warnings about cryptocurrencies like Bitcoin in December 2013, citing risks like the lack of legal protection, speculative nature, volatility, and potential for criminal use. In February 2018, the Capital Markets Authority (CMA) issued Announcement 30, prohibiting licensed financial institutions from issuing, marketing, or trading cryptocurrencies, emphasizing the absence of legal frameworks and the potential for illicit activities.

Despite these warnings and restrictions, cryptocurrency trading, especially peer-to-peer (P2P), has surged since the onset of the severe economic crisis in 2019. Citizens are using informal channels, such as over-the-counter (OTC) markets and Telegram groups, to trade cryptocurrencies, particularly USDT, as a hedge against the devaluing Lebanese pound and to circumvent capital controls. This P2P market operates largely unregulated, existing in a 'shadow space.'

As of mid-2025, Lebanon lacks specific laws to regulate or license cryptocurrency exchanges or define the legal status of cryptocurrencies for individuals beyond the warnings and restrictions on financial institutions. There is no clear framework for taxation of crypto assets, nor are there specific KYC/AML rules for P2P trading, although general AML laws (like Law No. 44 of 2015) exist. The Special Investigation Commission (SIC), Lebanon's Financial Intelligence Unit (FIU), is reportedly scrutinizing virtual asset service providers (VASPs).

The situation is often described as 'contradictory' or ambiguous: an officially restrictive stance combined with a 'practical tolerance' driven by the economic realities. While authorities warn against crypto, the economic crisis means many Lebanese see it as a necessary tool for financial survival, and enforcement against individual P2P activity appears limited. Some sources indicate that agencies adopted a practical tolerance towards crypto operations due to their role in remittances and savings preservation. AInvest noted on June 19, 2025, that Lebanon's crypto policies are contradictory, with an officially restrictive stance but practical permissiveness due to the economic collapse. The BDL's banking ban on crypto transactions blocks formal exchanges, but the lack of KYC/AML rules for peer-to-peer trading creates an unregulated shadow market.

There are ongoing discussions about potential regulations, partly influenced by pressure from international bodies like the IMF for broader financial reforms. A possible licensing framework for exchanges might emerge by 2026-2027, but significant uncertainties remain due to the central bank's cautious stance and the country's economic fragility. The BDL had previously mentioned plans for its own central bank digital currency (CBDC) in 2017 and again in 2020 for a 2021 launch, but its development status is unclear, especially given leadership changes and ongoing crises. Ultimately, retail trading is not explicitly banned for individuals, allowing a significant unregulated P2P market to flourish out of necessity, but individuals engage in these activities without legal protection, clear tax guidelines, or established KYC/AML procedures for these informal platforms, placing them in a legally ambiguous and high-risk environment.

Summary Points

Retail Trading of Cryptocurrencies in Lebanon: Regulatory Analysis (June 2025)

Overall Status: Gray-Zone

  • Retail cryptocurrency trading is not explicitly illegal for individuals.
  • However, the regulatory environment is ambiguous and high-risk due to:
    • Lack of formal recognition of cryptocurrencies.
    • Official warnings from regulatory bodies.
    • Ban on financial institutions engaging in cryptocurrency transactions.

1. Key Regulatory Bodies and Their Roles

  • Banque du Liban (BDL) - Central Bank:
    • Issued warnings about cryptocurrencies (starting in 2013) regarding risks like volatility, lack of legal protection, and potential for criminal use.
    • Prohibits banks from handling cryptocurrency transactions.
    • Previously considered a Central Bank Digital Currency (CBDC), but development status is unclear.
  • Capital Markets Authority (CMA):
    • Issued Announcement 30 (February 2018) prohibiting licensed financial institutions from issuing, marketing, or trading cryptocurrencies.
  • Special Investigation Commission (SIC) - Financial Intelligence Unit (FIU):
    • Scrutinizing Virtual Asset Service Providers (VASPs) despite the lack of a fully established regulatory framework.
    • Enforces general AML laws (Law No. 44 of 2015), but application to the informal crypto sector is not well-defined.

2. Important Legislation and Regulations

  • No specific laws regulating or licensing cryptocurrency exchanges or defining the legal status of cryptocurrencies for individuals.
  • CMA Announcement 30 (February 2018): Prohibits financial institutions from engaging in cryptocurrency activities.
  • Law No. 44 of 2015: General Anti-Money Laundering (AML) law, but its application to the informal crypto sector is unclear.

3. Requirements for Compliance

  • No specific KYC/AML rules for P2P cryptocurrency trading.
  • General AML laws exist, but their application to the informal crypto sector is not well-defined.

4. Notable Restrictions or Limitations

  • Ban on financial institutions: Banks and other licensed financial institutions are prohibited from issuing, marketing, or trading cryptocurrencies.
  • Lack of legal protection: Individuals trading cryptocurrencies have limited legal recourse in case of fraud or loss.
  • No clear tax framework: Taxation of crypto assets is not defined.

5. Recent Developments or Changes

  • Growth of P2P trading: Cryptocurrency trading, particularly P2P, has increased significantly due to the economic crisis and capital controls.
  • "Practical Tolerance": Despite official warnings, authorities exhibit a "practical tolerance" towards crypto operations due to their role in remittances and savings preservation.
  • Ongoing discussions about potential regulations: Influenced by international bodies like the IMF, a licensing framework for exchanges might emerge in the future.

6. Future Outlook

  • Potential for a licensing framework for cryptocurrency exchanges in the future (2026-2027).
  • Uncertainties remain due to the central bank's cautious stance and the country's economic fragility.
  • Development status of the BDL's proposed CBDC is unclear.

7. Key Risks

  • Volatility: Cryptocurrencies are subject to high price volatility.
  • Lack of legal protection: Individuals trading cryptocurrencies have limited legal recourse in case of fraud or loss.
  • Potential for use in illicit activities: Cryptocurrencies can be used for money laundering and terrorism financing.
  • Irreversibility of transactions: Incorrect or unauthorized transactions are often irreversible.

Full Analysis Report

Retail_Trading_Status: Lebanon

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. Current Status: Gray-Zone

The most accurate current status for retail cryptocurrency trading in Lebanon is Gray-Zone. While not explicitly illegal for individuals to buy, sell, or hold cryptocurrencies, the regulatory environment is characterized by a lack of formal recognition, official warnings, and a ban on financial institutions from engaging in cryptocurrency transactions. This creates an ambiguous and high-risk environment for retail traders.

2. Detailed Narrative Explanation

Lebanon's stance on cryptocurrencies has been shaped significantly by its severe and ongoing economic crisis, which began in 2019. This crisis has led to a collapse in the value of the Lebanese pound, a dysfunctional banking sector with strict capital controls, and a widespread loss of faith in traditional financial institutions. In this context, cryptocurrencies, particularly stablecoins like USDT, have emerged as an alternative for some Lebanese to preserve savings, conduct transactions, and receive remittances.

Official Stance and Warnings:
The Banque du Liban (BDL), Lebanon's central bank, first issued warnings about cryptocurrencies, specifically Bitcoin, in December 2013. These warnings highlighted risks such as the lack of legal protection, the speculative nature of cryptocurrencies, their volatility, and their potential use in criminal activities.

In February 2018, the Capital Markets Authority (CMA) issued Announcement 30, which explicitly prohibited licensed financial institutions (banks, exchanges, etc.) from issuing, marketing, or trading cryptocurrencies for their own account or on behalf of clients. The CMA cited several reasons for this prohibition:
* Lack of laws or regulations governing cryptocurrency platforms.
* Absence of legal frameworks guaranteeing the ability to cash out cryptocurrencies.
* Cryptocurrencies are not issued or guaranteed by any central bank, leading to high price volatility.
* Potential for use in illicit activities like money laundering and terrorism financing.
* Irreversibility of incorrect or unauthorized transactions.

These official pronouncements focus on restricting financial institutions and warning the public, but they do not explicitly ban individual citizens from owning, buying, or selling cryptocurrencies through peer-to-peer (P2P) methods or with entities outside Lebanon's regulated financial system.

Prevalence of P2P and Unregulated Trading:
Despite the warnings and the ban on financial institutions, cryptocurrency trading, particularly P2P, has grown significantly in Lebanon, especially since the onset of the economic crisis. Citizens utilize informal channels, including over-the-counter (OTC) markets and social media platforms like Telegram, to trade cryptocurrencies, often using USDT as a hedge against the devaluing Lebanese pound and to navigate capital controls. This P2P market operates in an unregulated shadow space.

Lack of Specific Crypto Regulations for Individuals:
As of mid-2025, Lebanon has not enacted specific laws to regulate or license cryptocurrency exchanges or define the legal status of cryptocurrencies for individuals beyond the warnings and the restrictions on financial institutions. There is no clear framework for taxation of crypto assets, nor are there specific KYC/AML (Know Your Customer/Anti-Money Laundering) rules for P2P trading. While general AML laws exist (like Law No. 44 of 2015), their application to the informal crypto sector is not well-defined, though the Special Investigation Commission (SIC), Lebanon's Financial Intelligence Unit (FIU), is reportedly scrutinizing virtual asset service providers (VASPs).

Ambiguity and "Practical Tolerance":
The situation is often described as contradictory or ambiguous: an officially restrictive stance combined with a "practical tolerance" driven by the economic realities. While authorities warn against crypto, the dire economic situation means many Lebanese see it as a necessary tool for financial survival, and enforcement against individual P2P activity appears limited. Some sources indicate that while no formal legalization had occurred by 2024-2025, agencies adopted a practical tolerance towards crypto operations due to their role in remittances and savings preservation.

Future Outlook:
There are ongoing discussions about potential regulations, partly influenced by pressure from international bodies like the International Monetary Fund (IMF) for broader financial reforms. A possible licensing framework for exchanges might emerge by 2026-2027, but significant uncertainties remain due to the central bank's cautious stance and the country's economic fragility. The BDL had previously mentioned plans for its own central bank digital currency (CBDC) in 2017 and again in 2020 for a 2021 launch, but its development status is unclear, especially given leadership changes and ongoing crises.

Conclusion on "Gray-Zone" Status:
The term "Gray-Zone" accurately reflects this complex situation. Retail trading is not explicitly banned for individuals, allowing a significant unregulated P2P market to flourish out of necessity. However, the lack of specific regulations, coupled with official warnings and a ban on financial sector involvement, means individuals engage in these activities without legal protection, clear tax guidelines, or established KYC/AML procedures for these informal platforms, placing them in a legally ambiguous and high-risk environment.

3. Specific, Relevant Text Excerpts

  • AInvest (June 19, 2025): "Lebanon's regulatory stance on cryptocurrencies remains ambiguous, with neither formal recognition nor outright prohibition. The Banque du Liban (BDL) has imposed a ban on banks handling cryptocurrency transactions, but this restriction does not apply to peer-to-peer trading. Consequently, most cryptocurrency activities occur informally, often facilitated through over-the-counter (OTC) markets or Telegram groups, where USDT is commonly used as a hedge against the collapsed Lebanese pound."
  • CoinStats, quoting Coinfomania (June 19, 2025): "Lebanon has a regulatory gray status regarding cryptocurrencies, which have neither been declared unlawful nor formally recognized. The Banque du Liban (BDL) prohibits its banks from handling any transactions related to cryptocurrency; however, the ban is not enforced against peer-to-peer trading."
  • Lebanese Army Official Website (undated, referencing 2013 and 2018 events): "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. 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."
  • Byblos Bank, referencing CMA Announcement 30 (February 12, 2018): "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."
  • AInvest (June 19, 2025): "Lebanon's crypto policies are contradictory, with an officially restrictive stance but practical permissiveness due to economic collapse. The BDL's banking ban on crypto transactions blocks formal exchanges, but the lack of KYC/AML rules for peer-to-peer trading creates an unregulated shadow market."
  • UPay Blog (December 7, 2024): "Adoption Status: Cryptocurrencies, including Bitcoin, are not legal tender in Lebanon. The Lebanese government has explicitly warned against their use, highlighting the associated risks." and "The situation became even clearer in 2018 when Lebanon's Capital Markets Authority (CMA) made some strict rules. They completely banned financial institutions from doing anything with cryptocurrencies – they couldn't create them, market them, or trade them."
  • Sanction Scanner (June 10, 2025) on AML: "Virtual Asset Service Providers (VASPs): While still in development, crypto-related businesses are a matter worth paying attention to. Although there is no fully established framework yet, the SIC and BDL are scrutinizing this matter."

4. Direct, Accessible URL Links to Sources

  1. [No direct link to a primary law explicitly permitting or banning individual retail crypto trading, as the situation is a gray zone defined by warnings and restrictions on financial institutions alongside widespread P2P activity.]
  2. Regulating Cryptocurrencies: The Dilemma of Reaching Consensus | Lebanese Army Official Website: https://www.lebarmy.gov.lb/en/content/regulating-cryptocurrencies-dilemma-reaching-consensus (Provides context on warnings and the "legal grey zone")
  3. Lebanon and Cryptocurrency - Freeman Law: https://freemanlaw.com/lebanon-and-cryptocurrency/ (References BDL's 2013 warning)
  4. Lebanon's Crypto Market Grows 10% Amid Economic Collapse - AInvest: https://ainvest.com/news/lebanons-crypto-market-grows-10-amid-economic-collapse-01hpsj8fzzswk0k94m9b0xq1qg/ (Details the ambiguous stance, P2P trading, and lack of regulation as of June 2025)
  5. Lebanon's financial crisis drives citizens toward cryptocurrency - bne IntelliNews: https://www.intellinews.com/lebanon-s-financial-crisis-drives-citizens-toward-cryptocurrency-312783/ (Mentions CMA's 2018 prohibition on financial institutions)
  6. Crypto Adoption Around the World: Lebanon - UPay Blog: https://upay.com/blog/crypto-adoption-around-the-world-lebanon (Discusses warnings, CMA ban, and crisis-driven adoption)
  7. Cryptocurrency Regulation in Lebanon - Coinfomania (June 19, 2025): https://coinfomania.com/cryptocurrency-regulation-in-lebanon/ (Describes "practical tolerance" and fragmented regulation)
  8. Cryptocurrency Regulation in Lebanon - CoinStats (quoting Coinfomania, June 19, 2025): https://coinstats.app/news/en/cryptocurrency-regulation-in-lebanon-by-coinfomania/ (States "regulatory gray status" and ban on banks vs. P2P)
  9. Lebanon This Week 528 | CMA prohibits usage of cryptocurrencies by financial institutions - Byblos Bank: https://www.byblosbank.com.lb/Lebanon-This-Week-Economic-Research-Byblos-Bank/Lebanon-This-Week-Issue-Number-528/CMA-prohibits-usage-of-cryptocurrencies-by-financial-institutions (Details CMA Announcement 30 from 2018)
  10. Seeking crypto transparency - Executive Magazine (February 15, 2018): https://www.executive-magazine.com/economics-policy/seeking-crypto-transparency (Discusses BDL's 2013 warning and early community views)
  11. Lebanon This Week 528 - Economic Research - Byblos Bank (PDF link might be within the page or a separate download for the full issue referencing the CMA prohibition): https://www.byblosbank.com.lb/arabic/Lebanon-This-Week-Economic-Research-Byblos-Bank/Lebanon-This-Week-Issue-Number-528 (The specific article on CMA is linked directly in)
  12. Cryptocurrency Regulation Tracker - Proelium Law LLP: https://www.proeliumlaw.com/crypto-reports/cryptocurrency-regulation-tracker/ (Categorizes Lebanon as "Hostile" due to central bank prohibition on financial institutions but notes no guidance for private citizens)
  13. Lebanon CBDC - Human Rights Foundation Site: https://hbr.org/2022/01/lebanon-cbdc (Mentions BDL's stance on crypto and CBDC plans)
  14. Anti-Money Laundering (AML) in Lebanon - Sanction Scanner (June 10, 2025): https://sanctionscanner.com/blog/anti-money-laundering-aml-in-lebanon-1673 (Provides information on AML framework and SIC's view on VASPs)
  15. Banque du Liban - Intermediate Circulars (Official BDL website for circulars, though specific crypto-related circulars for individuals are not the primary regulatory tool here; the restrictions are more on institutions and through general warnings): https://www.bdl.gov.lb/tabs/index/2/300/Intermediate-Circulars.html

Web Sources (14)

Sources discovered via web search grounding

Search queries used (6)
  • Lebanon cryptocurrency regulation official
  • Banque du Liban cryptocurrency circulars
  • Lebanon Capital Markets Authority cryptocurrency
  • Retail crypto trading legal status Lebanon 2024 2025
  • Lebanon AML KYC cryptocurrency regulations
  • Warnings about cryptocurrency trading in Lebanon by authorities
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