Lesotho

Retail_Trading_Status

Allowed-Unregulated Unknown

Analysis ID: #392
Version: Latest
Created: 2025-06-26 12:52
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Workflow Stage: Live

Executive Summary

Retail cryptocurrency trading in Lesotho is 'Allowed-UnRegulated' as there is no specific legislation governing cryptocurrencies, but key financial laws exist. The Central Bank of Lesotho (CBL) does not regulate cryptocurrencies and has issued warnings about the associated risks. Individuals must comply with broader financial laws such as AML/CFT, tax, and exchange controls. While some sources suggest a ban, the majority indicate a lack of specific regulation rather than an outright prohibition.

Key Pillars

The primary regulator is the Central Bank of Lesotho (CBL), which does not currently regulate cryptocurrencies. Core compliance requirements include adherence to existing Anti-Money Laundering (AML), Counter-Terrorist Financing (CFT), tax, and exchange control laws. There are no specific licensing or registration requirements for cryptocurrency exchanges operating locally, but entities must not violate existing financial laws.

Landmark Laws

Financial Institutions Act, 2012: Regulates financial institutions but does not explicitly cover cryptocurrency transactions.
Central Bank of Lesotho Act, 2000: Does not provide the CBL with direct authority to oversee cryptocurrency activities.
Central Bank of Lesotho Capital Market Regulations of 2014: Requires a license for providing investment advice, potentially affecting cryptocurrency promoters.

Considerations

Cryptocurrencies are not considered legal tender in Lesotho. The Central Bank of Lesotho (CBL) has warned about the risks associated with cryptocurrencies, including potential violations of AML/CFT, tax, and exchange control laws. Promoting cryptocurrency investment opportunities may require a license under the Central Bank of Lesotho Capital Market Regulations of 2014. The legal status of cryptocurrencies remains unclear due to the absence of specific regulations, potentially leading to legal risks for individuals and businesses.

Notes

A Central Bank of Lesotho press statement was issued on November 9, 2017, warning the public about the risks of cryptocurrencies and stating that the CBL does not oversee or regulate them. Some sources, like an IMF blog from November 2022, provide contradictory information suggesting a ban, but the weight of evidence points to a lack of specific regulation. The regulatory landscape for cryptocurrencies in Lesotho is subject to change, and the legal status remains somewhat unclear. Lesotho did not respond to an IMF survey in March 2024 about crypto regulations in Sub-Saharan Africa.

Detailed Explanation

As of April 13, 2025, the status of retail cryptocurrency trading in Lesotho is 'Allowed-UnRegulated.' No specific legislation or regulatory framework explicitly governs cryptocurrencies or virtual assets. Key financial laws, including the Financial Institutions Act, 2012, and the Central Bank of Lesotho Act, 2000, do not address cryptocurrency activities, and cryptocurrencies are not legally defined as securities or legal tender. While not explicitly prohibited, the Central Bank of Lesotho (CBL) has warned of associated risks, emphasizing that cryptocurrencies are not legal tender, are not regulated by the CBL, and that users act at their own risk with no recourse to the Central Bank in case of losses. The CBL has highlighted potential violations of Anti-Money Laundering (AML), Counter-Terrorist Financing (CFT), tax, and exchange control laws. Promoting cryptocurrency investment opportunities is problematic, as it typically lacks the required licensing under the Central Bank of Lesotho Capital Market Regulations of 2014. Individuals can technically trade and hold cryptocurrencies due to the absence of a specific ban, but they operate in an unregulated space and must comply with broader financial laws. The lack of specific crypto regulation means there are no dedicated consumer protection mechanisms, licensing requirements for exchanges, or specific KYC/AML protocols tailored to crypto platforms mandated by Lesotho authorities. The government has shown some interest in blockchain technology, but this has not yet translated into a formal regulatory framework. Some sources indicate ongoing uncertainty and potential legal risks due to this lack of clarity. Multiple sources, including Afriwise (Mayet & Associates) and Webber Newdigate, indicate that while cryptocurrency trading is not explicitly prohibited, individuals must be cautious to avoid breaching tax, AML, and exchange control laws. A Central Bank of Lesotho press statement from November 9, 2017, advises the public that the CBL does not oversee, supervise, or regulate cryptocurrencies, and users bear sole risk. Despite some conflicting information from the IMF (in Nov 2022 and Mar 2024) suggesting a ban, the overall evidence indicates a lack of specific regulation rather than an outright prohibition.

Summary Points

Okay, here's the regulatory analysis report converted into a clear, well-structured bullet point format:

Retail Cryptocurrency Trading Status in Lesotho: Regulatory Overview (April 13, 2025)

I. Overall Regulatory Status:

Allowed-UnRegulated: Retail cryptocurrency trading (buying, selling, holding) is not explicitly prohibited in Lesotho. However, there is no specific regulatory framework governing cryptocurrencies or virtual assets.

II. Key Regulatory Bodies:

Central Bank of Lesotho (CBL):
- Role: The primary financial regulator in Lesotho.
- Cryptocurrency Oversight: Does not oversee, supervise, or regulate cryptocurrencies, their systems, promoters, or intermediaries.
- Warnings: Has issued warnings to the public regarding the risks associated with cryptocurrencies.
- Authority: The Central Bank of Lesotho Act and related regulations do not provide the CBL with direct authority to oversee cryptocurrency activities.
Revenue Service Lesotho: Responsible for enforcing tax laws. Cryptocurrency activities could potentially lead to failure to declare income.

III. Important Legislation and Regulations:

Financial Institutions Act, 2012:
- Scope: Regulates banking and non-banking financial institutions.
- Cryptocurrency Coverage: Does not explicitly cover cryptocurrency transactions.
Central Bank of Lesotho Act, 2000:
- Cryptocurrency Coverage: Does not specifically address or regulate cryptocurrency activities.
Central Bank of Lesotho Capital Market Regulations of 2014:
- Investment Advice: Providing investment advice requires a license under these regulations. Cryptocurrency promoters typically lack this license.
Absence of Specific Crypto Legislation: There is no specific legislation or regulatory framework in Lesotho that explicitly governs cryptocurrencies or virtual assets.

IV. Requirements for Compliance:

General Financial Laws: Individuals engaging in cryptocurrency activities must ensure compliance with broader financial laws, including:
- Anti-Money Laundering (AML) and Counter-Terrorist Financing (CFT) laws.
- Tax laws (e.g., declaring income to the Revenue Service Lesotho).
- Exchange control laws.
Investment Advice Licensing: Promoting cryptocurrency investment opportunities requires a license under the Central Bank of Lesotho Capital Market Regulations of 2014.

V. Notable Restrictions or Limitations:

No Legal Tender Status: Cryptocurrencies are not legal tender in Lesotho.
Lack of Consumer Protection: No dedicated consumer protection mechanisms exist for cryptocurrency users.
No Licensing Requirements (Local Exchanges): No specific licensing requirements for cryptocurrency exchanges operating locally (though international exchanges may be accessible).
No Specific KYC/AML Protocols: No specific KYC/AML protocols tailored to crypto platforms mandated by Lesotho authorities.
Risk of Violating Existing Laws: Cryptocurrency activities could potentially lead participants to violate existing AML/CFT, tax, and exchange control laws.
Lack of Recourse: Users engage in cryptocurrency activities at their own risk with no recourse to the Central Bank in case of losses.

VI. Recent Developments or Changes:

Government Interest in Blockchain: The government has shown some interest in exploring blockchain technology, but this has not yet translated into a formal regulatory framework for cryptocurrencies themselves.
Ongoing Uncertainty: Some sources indicate ongoing uncertainty and potential legal risks due to the lack of clarity in the regulatory environment.

VII. Central Bank of Lesotho Warnings:

Cryptocurrencies are not legal tender in Lesotho.
The Central Bank of Lesotho does not oversee, supervise or regulate the cryptocurrencies, their systems, promoters or intermediaries.
Any activities related to the acquisition, trading or use of cryptocurrencies is at the user's sole and independent risk.
In the event of losses or similar eventualities, there shall not be recourse to the Central Bank of Lesotho.
Cryptocurrencies expose participants to violation of: Anti-money laundering and combating of terrorist financing laws; Tax laws; and Exchange control laws.

VIII. Contradictory Information:

Some sources (e.g., older IMF reports) suggest a ban on crypto in Lesotho. However, the preponderance of evidence from legal analyses and CBL statements points towards a lack of regulation rather than an explicit legal prohibition on individuals holding or trading crypto.

Disclaimer: This report is based on publicly available information accessed up to April 13, 2025. The regulatory landscape for cryptocurrencies can change rapidly. It is advisable to consult with legal professionals specializing in Lesotho's financial regulations for specific advice.

Full Analysis Report

Retail Cryptocurrency Trading Status: Lesotho

Date: 2025-06-26

Retail_Trading_Status: Gray-Zone

Narrative Explanation:

The status of retail cryptocurrency trading in Lesotho is best described as a "Gray-Zone." This is because while there is no explicit law prohibiting individuals from buying, selling, or holding cryptocurrencies, the regulatory environment is characterized by a lack of specific crypto-focused legislation, coupled with strong warnings and concerns from the Central Bank of Lesotho (CBL). This creates a situation where the activity is not illegal per se, but operates outside the formal financial regulatory framework and carries significant risks of non-compliance with existing general financial laws.

The Central Bank of Lesotho has not recognized cryptocurrencies as legal tender or as a foreign currency. It has repeatedly issued statements cautioning the public about the risks associated with cryptocurrencies, emphasizing that these assets do not fall under its regulatory purview. Consequently, individuals engaging in cryptocurrency transactions have no recourse to the CBL in the event of losses.

Key legislation governing financial activities in Lesotho, such as the Financial Institutions Act of 2012, does not explicitly address cryptocurrency transactions. Similarly, the Central Bank of Lesotho Act and its related regulations do not grant the CBL direct authority to oversee cryptocurrency activities, largely because cryptocurrencies do not fit the legal definition of securities under current regulations.

Despite the absence of a direct ban on trading, the CBL has highlighted that cryptocurrency transactions could lead to violations of existing laws, including:
* Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) laws.
* Tax laws (e.g., failure to declare crypto-related income to the Revenue Service Lesotho).
* Exchange control laws.

The CBL has also warned that promoting cryptocurrency investment opportunities without a license violates the Central Bank of Lesotho Capital Market Regulations of 2014. This suggests a "hostile" stance from the regulator towards unregulated crypto promotion.

While some sources indicate that cryptocurrency exchange providers are legal to operate in Lesotho, they also note the lack of a governing legal framework for their operations. This further underscores the unregulated nature of the sector.

There is an apparent contradiction in some reporting, with one source from late 2022 (IMF) listing Lesotho as one of six African countries that have "banned crypto". However, more recent and detailed legal analyses from 2024 and 2025 suggest that it is not an explicit ban on holding or trading by individuals, but rather a lack of regulation and strong warnings about potential legal breaches. The CBL's own statements focus on the risks and lack of regulatory oversight rather than an outright prohibition of individual participation.

Lesotho has AML/KYC regulations in place, such as the Money Laundering and Proceeds of Crime Act 2008 and the Data Protection Act, 2013, which would generally apply to financial activities. However, the application of these to crypto-specific platforms operating in or catering to Lesotho residents is not clearly defined due to the overall lack of crypto-specific regulation.

The situation remains dynamic, with the CBL acknowledging innovation in the financial industry but prioritizing consumer protection and adherence to existing financial laws. There is an understanding that individuals involved in cryptocurrency transactions must be cautious and ensure they comply with all applicable financial regulations to avoid unintentional breaches.

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."
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."
Freeman Law (referencing a February 2018 CBL statement): "The Central Bank's statement warns citizens of the risks associated with cryptocurrencies and emphasized that “cryptocurrencies expose participants to violation of. . . Anti-money laundering and combating of terrorist financing laws; tax laws; and exchange control laws, which are prosecutable transgressions.”"
Central Bank of Lesotho (Press Statement, latest version referencing May 20, 2024, similar to earlier statements): "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): "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 legal but unregulated in Lesotho and while Lesotho has the potential to leverage blockchain technology and cryptocurrencies to drive economic growth and financial inclusion, significant challenges persist. Regulatory uncertainty, limited digital literacy, and infrastructure gaps hinder widespread adoption."
Webber Newdigate (June 22, 2021): "While the purchase and sale of cryptocurrency itself is not illegal, it may lead to the transgression of tax, money-laundering and exchange control laws, due to its nature as an unregulated asset."
International Monetary Fund (November 22, 2022): "However, as our Chart of the Week shows, two-thirds have implemented some restrictions and six countries—Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of Congo—have banned crypto." (This contrasts with more recent legal analyses which suggest no explicit ban on individual activity but a highly cautious and unregulated environment).

URL Links to Sources:

## Retail Cryptocurrency Trading Status: Lesotho

**Date:** 2025-06-26

**Retail_Trading_Status:** Gray-Zone

**Narrative Explanation:**

The status of retail cryptocurrency trading in Lesotho is best described as a "Gray-Zone." This is because while there is no explicit law prohibiting individuals from buying, selling, or holding cryptocurrencies, the regulatory environment is characterized by a lack of specific crypto-focused legislation, coupled with strong warnings and concerns from the Central Bank of Lesotho (CBL). This creates a situation where the activity is not illegal per se, but operates outside the formal financial regulatory framework and carries significant risks of non-compliance with existing general financial laws.

The Central Bank of Lesotho has not recognized cryptocurrencies as legal tender or as a foreign currency. It has repeatedly issued statements cautioning the public about the risks associated with cryptocurrencies, emphasizing that these assets do not fall under its regulatory purview. Consequently, individuals engaging in cryptocurrency transactions have no recourse to the CBL in the event of losses.

Key legislation governing financial activities in Lesotho, such as the Financial Institutions Act of 2012, does not explicitly address cryptocurrency transactions. Similarly, the Central Bank of Lesotho Act and its related regulations do not grant the CBL direct authority to oversee cryptocurrency activities, largely because cryptocurrencies do not fit the legal definition of securities under current regulations.

Despite the absence of a direct ban on trading, the CBL has highlighted that cryptocurrency transactions could lead to violations of existing laws, including:
*   Anti-Money Laundering and Counter-Terrorist Financing (AML/CTF) laws.
*   Tax laws (e.g., failure to declare crypto-related income to the Revenue Service Lesotho).
*   Exchange control laws.

The CBL has also warned that promoting cryptocurrency investment opportunities without a license violates the Central Bank of Lesotho Capital Market Regulations of 2014. This suggests a "hostile" stance from the regulator towards unregulated crypto promotion.

While some sources indicate that cryptocurrency exchange providers are legal to operate in Lesotho, they also note the lack of a governing legal framework for their operations. This further underscores the unregulated nature of the sector.

There is an apparent contradiction in some reporting, with one source from late 2022 (IMF) listing Lesotho as one of six African countries that have "banned crypto". However, more recent and detailed legal analyses from 2024 and 2025 suggest that it is not an explicit ban on holding or trading by individuals, but rather a lack of regulation and strong warnings about potential legal breaches. The CBL's own statements focus on the risks and lack of regulatory oversight rather than an outright prohibition of individual participation.

Lesotho has AML/KYC regulations in place, such as the Money Laundering and Proceeds of Crime Act 2008 and the Data Protection Act, 2013, which would generally apply to financial activities. However, the application of these to crypto-specific platforms operating in or catering to Lesotho residents is not clearly defined due to the overall lack of crypto-specific regulation.

The situation remains dynamic, with the CBL acknowledging innovation in the financial industry but prioritizing consumer protection and adherence to existing financial laws. There is an understanding that individuals involved in cryptocurrency transactions must be cautious and ensure they comply with all applicable financial regulations to avoid unintentional breaches.

**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."
*   **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."
*   **Freeman Law (referencing a February 2018 CBL statement):** "The Central Bank's statement warns citizens of the risks associated with cryptocurrencies and emphasized that “cryptocurrencies expose participants to violation of. . . Anti-money laundering and combating of terrorist financing laws; tax laws; and exchange control laws, which are prosecutable transgressions.”"
*   **Central Bank of Lesotho (Press Statement, latest version referencing May 20, 2024, similar to earlier statements):** "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):** "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 legal but unregulated in Lesotho and while Lesotho has the potential to leverage blockchain technology and cryptocurrencies to drive economic growth and financial inclusion, significant challenges persist. Regulatory uncertainty, limited digital literacy, and infrastructure gaps hinder widespread adoption."
*   **Webber Newdigate (June 22, 2021):** "While the purchase and sale of cryptocurrency itself is not illegal, it may lead to the transgression of tax, money-laundering and exchange control laws, due to its nature as an unregulated asset."
*   **International Monetary Fund (November 22, 2022):** "However, as our Chart of the Week shows, two-thirds have implemented some restrictions and six countries—Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of Congo—have banned crypto." (This contrasts with more recent legal analyses which suggest no explicit ban on individual activity but a highly cautious and unregulated environment).

**URL Links to Sources:**

*   [Afriwise (May 3, 2025)](https://www.afriwise.com/insights/the-legal-status-of-cryptocurrency-in-lesotho/)
*   [Freeman Law](https://freemanlaw.com/lesotho-and-cryptocurrency/)
*   [Proelium Law LLP - Cryptocurrency Regulation Tracker](https://www.proeliumlaw.com/crypto-regulatory-tracker/)
*   [Mayet & Associates (similar to Afriwise content)](https://mayetassociates.co.za/the-legal-status-of-cryptocurrency-in-lesotho/)
*   [LEX Africa (June 26, 2023 - article date, content on Lesotho may be older)](https://www.lexafrica.com/digital-currencies-and-services-gaining-momentum-across-the-continent/)
*   [Central Bank of Lesotho - Press Statement on Cryptocurrencies (referencing May 20, 2024)](https://www.centralbank.org.ls/index.php/media-mainmenu-196/press-releases-mainmenu-198/822-press-statement-on-the-emergence-and-promotion-of-cryptocurrencies)
*   [UPay Blog (December 8, 2024)](https://upay.co.za/blog/crypto-adoption-around-the-world-lesotho/)
*   [Lesotho News (republishing CBL Statement, January 20, 2022)](https://lesothonews.co.ls/2022/01/20/press-statement-on-the-emergence-and-promotion-of-cryptocurrencies/)
*   [UEEx Technology (April 30, 2025 - note: this is a crypto exchange site, treat with appropriate caution as a secondary source)](https://www.ueex.com/en/blog/best-crypto-exchanges-in-lesotho-12880/)
*   [Webber Newdigate (June 22, 2021)](https://webbernewdigate.co.ls/does-buying-cryptocurrency-make-you-a-criminal/)
*   [Smile ID (undated, accessed June 2024)](https://usesmileid.com/identity-verification-lesotho)
*   [International Monetary Fund (November 22, 2022)](https://www.imf.org/en/Blogs/Articles/2022/11/21/chart-of-the-week-112122-africa-crypto-market)

Web Sources (12)

Sources discovered via web search grounding

Search queries used (6)

Central Bank of Lesotho cryptocurrency regulation
Lesotho cryptocurrency laws
retail crypto trading Lesotho legal status
Lesotho crypto KYC AML requirements
Lesotho official statements on cryptocurrency
Lesotho financial regulatory authority cryptocurrency

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