Back to Analyses

Libya

Retail_Trading_Status

Banned Unknown
Edit
Analysis ID
#45
Version
Archived
Created
2025-04-12 06:40
Workflow Stage
Live

Executive Summary

Cryptocurrency trading by retail users is banned in Libya, according to explicit statements from the Central Bank of Libya (CBL) since 2018. The CBL cites concerns about money laundering and terrorism financing as primary justifications. Financial institutions are prohibited from dealing in cryptocurrencies, and there is no regulatory framework for licensing exchanges or imposing KYC/AML requirements. Despite the ban, crypto mining persists, driven by low electricity costs, though it operates outside the legal framework.

Key Pillars

The primary regulator is the Central Bank of Libya (CBL), which prohibits cryptocurrency trading and financial institutions' involvement. Core compliance requirements such as AML and KYC are not applicable due to the ban. There are no licensing or registration requirements for virtual asset service providers because the activity is prohibited.

Landmark Laws

Central Bank of Libya (CBL) Statement (early 2018): Declared virtual currencies such as Bitcoin illegal and stated that no legal protection will be afforded to anyone using or trading them.
CBL Notice (May 15, 2021): Prohibits financial institutions operating in Libya from dealing in cryptocurrencies or offering related services.

Considerations

Cryptocurrencies are viewed as potential vehicles for illicit activities such as money laundering and terrorism financing. There is no explicit legal classification of crypto assets, nor is there a defined tax treatment. A major concern raised by the Central Bank of Libya (CBL) is the lack of legal protection for individuals involved in cryptocurrency transactions. Fiat access is limited due to the ban on financial institutions dealing with cryptocurrencies. Cryptocurrency mining persists despite the ban, driven by low electricity costs.

Notes

In 2018, the Central Bank of Libya (CBL) declared cryptocurrencies illegal. Cryptocurrency mining persists despite the ban due to low electricity costs. There are reports suggesting that the Libyan House of Representatives is considering developing regulations for the crypto industry, though no concrete legislation has emerged. Major international cryptocurrency exchanges like Binance and Coinbase do not offer their full services in Libya. The 2021 Cybercrime Law defines electronic money but does not specifically address or legitimize cryptocurrency trading or mining, leaving the CBL's ban as the prevailing directive.

Detailed Explanation

The Central Bank of Libya (CBL) has declared cryptocurrencies like Bitcoin illegal since 2018, prohibiting their use, trading, and investment by individuals and entities. The CBL's stance is rooted in concerns about potential use in illicit activities such as money laundering, terrorism financing, and other financial crimes, citing the anonymity associated with crypto transactions and the lack of governmental oversight. Consequently, the CBL has stated that individuals engaging in cryptocurrency transactions will not receive legal protection under Libyan law. A notice issued on May 15, 2021, reinforces this ban by prohibiting financial institutions in Libya from dealing in cryptocurrencies or offering related services. Despite the official ban, cryptocurrency activity, particularly mining, persists due to low electricity costs, although these operations are illegal and subject to enforcement. Authorities have conducted raids and made arrests related to illegal cryptocurrency mining operations. While Libyan law may not explicitly criminalize mining or trading, conducting these activities without CBL authorization is a violation of central bank directives and can lead to legal consequences. Activities like illegally tapping into the power grid for mining are prosecuted. The 2021 Cybercrime Law defines electronic money but doesn't address or legitimize cryptocurrency. There's no regulatory framework for licensing crypto exchanges or imposing KYC/AML requirements. Major international exchanges like Binance and Coinbase do not offer full services in Libya. The Libyan House of Representatives is reportedly considering crypto regulations, but no concrete legislation has emerged. The ban remains the prevailing directive from the CBL.

Summary Points

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

Retail Cryptocurrency Trading Status in Libya: Regulatory Analysis (April 12, 2025)

I. Overall Regulatory Status:

  • Banned: Retail cryptocurrency trading (buying, selling, holding) is prohibited in Libya.

II. Key Regulatory Bodies and Their Roles:

  • Central Bank of Libya (CBL):
    • Primary regulatory body concerning cryptocurrencies.
    • Issued explicit statements declaring virtual currencies illegal (2018).
    • Prohibits financial institutions from dealing in cryptocurrencies or offering related services (May 15, 2021).
    • Justifications for the ban include concerns about money laundering, terrorism financing, and lack of governmental oversight.
    • Individuals engaging in cryptocurrency transactions will not receive legal protection under Libyan law.
  • Libyan House of Representatives:
    • Reportedly considering developing regulations for the crypto industry, but no concrete legislation has emerged.

III. Important Legislation and Regulations:

  • CBL Directives (2018, 2021):
    • Bans the use, trading, and investment in cryptocurrencies by individuals and entities.
    • Prohibits financial institutions from dealing in cryptocurrencies.
  • 2021 Cybercrime Law:
    • Defines electronic money but does not specifically address or legitimize cryptocurrency trading or mining.
    • The CBL's ban remains the prevailing directive.

IV. Requirements for Compliance (or Lack Thereof):

  • No Regulatory Framework:
    • No licensing framework for cryptocurrency exchanges.
    • No specific Know Your Customer (KYC) or Anti-Money Laundering (AML) requirements for virtual asset service providers.
    • Major international cryptocurrency exchanges (e.g., Binance, Coinbase) do not offer full services in Libya.

V. Notable Restrictions and Limitations:

  • Complete Ban: Individuals and entities are prohibited from engaging in cryptocurrency trading.
  • Financial Institutions: Financial institutions are barred from providing any cryptocurrency-related services.
  • Lack of Legal Protection: Individuals using or trading cryptocurrencies are not protected by Libyan law.
  • Enforcement Actions: Authorities conduct raids and make arrests related to illegal cryptocurrency mining operations.

VI. Recent Developments and Changes:

  • Persistence of Crypto Activity: Despite the ban, cryptocurrency activity, particularly mining, persists due to low electricity costs.
  • Growing Interest: There is growing interest in cryptocurrencies among parts of the population, especially the youth.
  • Parliamentary Discussions: The Libyan House of Representatives is reportedly considering developing regulations for the crypto industry, but no legislation has been enacted.
  • Enforcement: Authorities continue to enforce the ban through raids and arrests related to illegal crypto mining.
  • Political Instability: Ongoing political instability complicates consistent enforcement of the ban and hinders the development of a regulatory framework.

Full Analysis Report

Financial Regulatory Report: Retail Cryptocurrency Trading Status in Libya

Date: April 12, 2025

Topic: Retail_Trading_Status (Cryptocurrency)

Description: This section assesses the legal permissibility for individual citizens and residents in Libya to engage in the buying, selling, and holding of cryptocurrencies. It details the prevailing regulatory environment, including any specific requirements or official warnings issued concerning these activities.

1. Current Status: Banned

2. Detailed Narrative Explanation:

The official stance of Libyan authorities towards cryptocurrency trading by retail users is prohibitive. In 2018, the Central Bank of Libya (CBL) issued explicit statements declaring virtual currencies, including Bitcoin, illegal within the country [2, 4, 11]. This ban extends to the use, trading, and investment in such assets by individuals and entities [2, 3, 12].

The primary justifications cited by the CBL for this prohibition revolve around significant risks associated with cryptocurrencies [2, 4, 8, 11]. These include concerns regarding their potential use in illicit activities such as money laundering, financing of terrorism, and other financial crimes [2, 4, 11]. The anonymity often associated with crypto transactions and the lack of governmental oversight or backing are key factors contributing to this position [7]. Consequently, the CBL has stated that individuals or entities engaging in cryptocurrency transactions will not receive legal protection under Libyan law [2, 3, 4, 7, 11].

Further reinforcing the ban, a notice issued by the CBL on May 15, 2021, explicitly prohibits financial institutions operating in Libya from dealing in cryptocurrencies or offering related services [5, 16]. This effectively cuts off the formal financial sector from engaging with the crypto market.

Despite the official ban, there is evidence of cryptocurrency activity persisting within Libya, particularly in the realm of crypto mining, driven significantly by the country's low electricity costs [4, 6, 8]. Reports indicate a growing interest among parts of the population, especially the youth [8]. However, these activities operate outside the legal framework and are subject to enforcement actions. Authorities have conducted raids and made arrests related to illegal cryptocurrency mining operations, highlighting the illicit nature of such activities under the current regime [6, 8, 9, 12].

While some legal analysis suggests that Libyan law may not explicitly criminalize the act of mining or trading crypto in specific statutes, engaging in these activities without the required authorization from the CBL (which is not granted due to the ban) constitutes a violation of the central bank's directives and can lead to legal consequences [8]. Furthermore, associated activities, like illegally tapping into the power grid for mining, are prosecuted [8]. The 2021 Cybercrime Law defines electronic money but does not specifically address or legitimize cryptocurrency trading or mining, leaving the CBL's ban as the prevailing directive [8].

There is no regulatory framework in place for licensing cryptocurrency exchanges or imposing specific Know Your Customer (KYC) or Anti-Money Laundering (AML) requirements on virtual asset service providers, as the activity itself is prohibited [8]. Major international cryptocurrency exchanges like Binance and Coinbase do not offer their full services in Libya [13, 14].

The ongoing political instability and fragmented governance in Libya further complicate the consistent enforcement of the ban and hinder the development of any potential future regulatory framework [9]. However, there have been reports suggesting that the Libyan House of Representatives is considering developing regulations for the crypto industry, though no concrete legislation has emerged yet [8].

In summary, based on the explicit directives from the Central Bank of Libya, the prohibition on financial institutions' involvement, and enforcement actions against related activities like mining, the status of retail cryptocurrency trading in Libya is categorized as Banned.

3. Relevant Text Excerpts:

  • On the Ban and Lack of Protection: "In early 2018, the Central Bank of Libya announced that virtual currencies such as Bitcoin are illegal and that no legal protection will be afforded to anyone using or trading them." [2]
    • Source: Baker McKenzie, "Blockchain and Cryptocurrency in Africa" report.
  • Reasoning for the Ban: "The Central Bank of Libya explained that virtual currencies were banned as 'these currencies may be used to carry out criminal activities and violations of laws such as money laundering and financing of terrorism.'" [2]
    • Source: Baker McKenzie, "Blockchain and Cryptocurrency in Africa" report.
  • Official CBL Statement (Summary): "The Central Bank of Libya (CBL) said virtual currency such as Bitcoin is illegal in Libya and those who use it cannot be protected by the Libyan law. CBL warned Tuesday all Libyans including companies of the security perils of using the virtual currency, saying it could be used in crimes, fusing terrorism and money laundering." [11]
    • Source: The Libya Observer, reporting on a CBL statement from May 15, 2018.
  • Ban on Financial Institutions: "Ban: Notice, issued on May 15, 2021, Central Bank of Libya... Financial institutions are banned from dealing in crypto- currencies." [5]
    • Source: Law Library of Congress, "Regulation of Cryptocurrency Around the World: November 2021 Update".
  • Persistence and Enforcement: "Since 2018, the Central Bank of Libya (CBL) imposed a ban on investing in cryptocurrencies... Libyan authorities have arrested 12 Chinese expatriates on charges of illegal mining of cryptocurrencies, such as Bitcoin and others." [12]
    • Source: LibyaReview, "Libya Arrests 12 Chinese Nationals for Illegal Crypto Mining".
  • Legal Nuance and Future Outlook: "Dr. Magdy Al-Shabani... explained... that Libyan law does not explicitly criminalise mining or cryptocurrency transactions. However, engaging in such activities without approval from the Central Bank of Libya (CBL) can lead to legal repercussions... Parliamentarians... told Al Jazeera Net that Libya's House of Representatives is working on regulations to address the crypto industry." [8]
    • Source: LibyaReview, "Libya Leads Arab World in Bitcoin Mining Despite Legal Uncertainty".

4. Source Links:

Reviews

No reviews yet

Submit Review

Challenge: Disagree with the analysis | Approval: Confirm it's correct | Refinement: Suggest improvements