Back to Analyses

Yemen

Retail_Trading_Status

Gray-Zone Unknown
Edit

Status Changed

Previous status: Unclear

The primary difference between the two analyses lies in the assessed "Current Status" of retail cryptocurrency trading in Yemen, which shifted from "Unclear" in the previous analysis (April 12, 2025) to "Gray-Zone" in the new analysis (June 26, 2025). This change, and the nuances in the detailed narrative, can be justified as follows: 1. Evolution in Understanding and Terminology: The term "Unclear" in the previous analysis accurately reflected the profound lack of specific legislation, official guidance, or a functioning, unified regulatory body to address cryptocurrency. It emphasized the ambiguity stemming from the conflict and fragmented governance. The new analysis's term "Gray-Zone" represents a refinement of this understanding. While it still acknowledges the absence of explicit legal permission or prohibition and the lack of a regulatory framework, "Gray-Zone" better captures the reality that cryptocurrency activities *are* taking place by individuals, despite the regulatory vacuum. It implies that while not explicitly illegal, these activities exist outside formal legal recognition and protection. This is a subtle but important distinction: "Unclear" might suggest a near-total void of information or activity, whereas "Gray-Zone" acknowledges activity occurring in an unregulated, legally ambiguous space. 2. Increased Emphasis on De Facto Adoption and Use: The new analysis places a stronger emphasis on the *actual use* of cryptocurrencies by Yemenis, driven by necessity. It highlights that "growing interest and use of cryptocurrencies in Yemen, primarily driven by necessity" such as for remittances, cross-border transactions, and bypassing disrupted traditional financial services, including the use of DeFi platforms. While the previous analysis mentioned that "some Yemenis may engage in cryptocurrency trading," the new analysis provides a more assertive stance on this adoption, supported by newer or differently focused source material (e.g., UPay Blog, Cointelegraph/TRM Labs articles from late 2024 and mid-2025 discussing DeFi adoption and crypto use in response to sanctions and economic conditions). This suggests that more evidence or analysis has emerged indicating a discernible level of retail activity. 3. Nuanced Interpretation of the Regulatory Vacuum: Both analyses agree on the core issue: the absence of specific crypto regulations due to the ongoing conflict and divided governance. However, the new analysis interprets the *consequence* of this vacuum slightly differently. The previous report focused on the resulting lack of legal standing and protection. The new report builds on this by characterizing the environment as one where activity persists *despite* this lack, operating within the undefined boundaries of this "gray zone." 4. Source Material and Timing: The new analysis incorporates sources, some of which are more recent or have a specific focus on crypto adoption trends in Yemen (e.g., Cointelegraph's April 2025 article on Yemenis turning to DeFi, TRM Labs' April 2025 report). These sources appear to provide more concrete, albeit still informal, evidence of ongoing retail-level engagement with cryptocurrencies. The previous analysis, while thorough, might not have had access to or placed as much weight on these specific indicators of active use. For instance, the Bitrawr source stating "legality... is currently unknown" is common to both, but the new analysis complements this with sources suggesting *how* people are navigating this unknown. In essence, the shift from "Unclear" to "Gray-Zone" does not indicate a change in Yemen's formal legal or regulatory framework regarding cryptocurrencies, as both reports confirm its absence. Instead, it reflects an updated assessment that better incorporates the evidence of ongoing, albeit unregulated and unprotected, retail cryptocurrency activity. The new status acknowledges that while the government(s) have not clarified the rules, the population, driven by circumstances, is engaging with crypto, placing these activities firmly in a legally ambiguous but active "Gray-Zone."

Analysis ID
#497
Version
Latest
Created
2025-06-26 13:18
Workflow Stage
Live

Executive Summary

As of June 2025, Yemen's regulatory landscape for retail cryptocurrency trading remains in a "Gray-Zone." While there are no explicit laws or regulations specifically addressing cryptocurrencies, the country's existing Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) laws, namely Law No. 1/2010, as amended by Law No. 17 of 2013, are theoretically applicable to crypto-related activities. However, the enforcement of these general laws in the context of cryptocurrencies is inconsistent, contributing to the unclear and somewhat ambiguous regulatory environment.

Key Pillars

  • The primary regulatory pillars that could potentially extend to cryptocurrency activities in Yemen are its general AML/CFT frameworks. These frameworks are designed to prevent illicit financial activities across all financial sectors, and their broad definitions of "funds" and "financial institutions" could, in principle, encompass digital assets and related service providers. Yemen is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF) and has made efforts to comply with FATF recommendations, although it remains on the FATF gray list due to security concerns preventing onsite visits to confirm sustained implementation of reforms.

Landmark Laws

Law No. 1/2010 On Combating Money Laundering and Financing of Terrorism
- Authority: Enacted by the House of Representatives, with the Central Bank of Yemen (CBY) and the Financial Information Unit (FIU) playing crucial roles in enforcement and oversight. The FIU is responsible for receiving, analyzing, and disseminating suspicious transaction reports. The National Committee for AML/CFT is also a key body responsible for strategy and implementation.
- Date: 2010
- Summary: This law established the primary legal framework for AML/CFT activities in Yemen, outlining definitions, obligations, penalties, and measures to combat money laundering and terrorism financing. It requires financial and non-financial institutions to classify customers and services based on money laundering and terrorism financing risk.

Law No. 17 of 2013 Amending Certain Articles of the Anti-Money Laundering and Counter-Terrorism Financing Law No. (1) of 2010
- Authority: Enacted to amend Law No. 1/2010. The Central Bank of Yemen issued instructions and publications to banks based on these acts.
- Date: 2013
- Summary: This amendment aimed to bring Yemen's AML/CFT framework into compliance with updates to the Financial Action Task Force's (FATF) 40 Recommendations. It reinforces the obligations of financial and non-financial institutions to report suspicious transactions to the FIU.

Considerations

  • Asset Classification: Yemen's laws do not explicitly classify cryptocurrencies as a specific asset type (e.g., currency, commodity, security). However, the broad definition of "funds" in AML/CFT laws, which can include "assets of every kind, whether corporeal or incorporeal, movable or immovable, currencies of all kinds, either foreign or local, and legal documents or instruments in any form," could theoretically apply to cryptocurrencies.

  • Taxation: There is no specific legislation or guidance on the taxation of retail crypto trading activities in Yemen. Given the "Gray-Zone" status and lack of explicit regulation, a dedicated tax framework for digital assets is not currently in place.

  • Enforcement Consistency: Despite the theoretical applicability of AML/CFT laws, the actual enforcement regarding cryptocurrency activities remains inconsistent. This inconsistency creates an environment of uncertainty for individuals and businesses involved in crypto trading.

  • Central Bank Stance: The Central Bank of Yemen (CBY) oversees banking system compliance with AML/CFT regulations. While the CBY has historically played a crucial role in financial regulation, there's no explicit public stance or regulation from the CBY specifically addressing retail cryptocurrency trading as of June 2025. However, some reports indicate the use of cryptocurrency in the country, including by illicit actors, and the U.S. Treasury has identified cryptocurrency wallets associated with Houthi financial networks.

Notes

  • Yemen's primary focus in financial regulation, particularly concerning emerging financial instruments, appears to be through the lens of AML/CFT, aligning with international standards set by bodies like FATF and MENAFATF. The country's ongoing internal conflict significantly complicates the establishment and consistent enforcement of comprehensive financial regulations, including those for cryptocurrencies. While the Financial Intelligence Unit (FIU) provides training to compliance officers and prepares strategic reports on money laundering patterns, these efforts primarily focus on general financial crimes rather than specific crypto regulatory frameworks. There are no public proposals or pilot programs for dedicated cryptocurrency regulations for retail trading. The challenging socio-economic and security situation in Yemen also means that, for most of the population, engaging in cryptocurrency business is difficult due to unreliable infrastructure and security concerns.

Detailed Explanation

Yemen's approach to retail cryptocurrency trading as of June 2025 is best characterized as a "Gray-Zone," reflecting a lack of specific, tailored regulations coupled with the theoretical applicability of existing general financial laws. This status is a significant refinement from previous "Unclear" assessments, acknowledging the complex interplay of limited governmental oversight, internal conflict, and the inherent challenges in enforcing financial regulations in such an environment. The foundational legal instruments that could extend to cryptocurrency activities are Law No. 1/2010 on Combating Money Laundering and Financing of Terrorism, and its subsequent amendment, Law No. 17 of 2013. These laws, enacted to align Yemen with international AML/CFT standards, broadly define "funds" to include various forms of assets, which could implicitly cover digital currencies. The Central Bank of Yemen (CBY) and the Financial Information Unit (FIU), alongside the National Committee for AML/CFT, are the key authorities tasked with implementing and enforcing these laws, particularly concerning the reporting and analysis of suspicious transactions. The FIU, for instance, is responsible for receiving and analyzing suspicious transaction reports from financial and non-financial institutions. However, the critical caveat lies in the inconsistent enforcement of these general AML/CFT laws regarding cryptocurrency activities. While financial institutions are generally obligated to implement risk-based approaches and conduct due diligence for unusual transactions, explicit guidance on how this applies to decentralized digital assets is absent. This gap means that while illicit use of cryptocurrencies could theoretically fall under money laundering or terrorism financing offenses, there isn't a clear, consistent regulatory framework specifically designed for legitimate retail crypto trading. Yemen remains on the FATF gray list, indicating that despite legislative efforts, challenges persist in demonstrating sustained implementation of AML/CFT reforms, partly due to security concerns preventing onsite assessments. Furthermore, the absence of specific legislation extends to crucial areas such as asset classification and taxation for cryptocurrencies. Unlike jurisdictions with explicit frameworks that define crypto assets as securities, commodities, or currencies for regulatory and tax purposes, Yemen has not issued such classifications. Consequently, there are no dedicated tax laws or guidelines for income derived from crypto trading or capital gains. The ongoing humanitarian crisis and internal conflict in Yemen also present unique challenges, with reports even indicating the use of cryptocurrency by various actors in the conflict, further complicating regulatory clarity and enforcement efforts. This complex operational environment underpins Yemen's "Gray-Zone" status, where the legal framework exists in a general sense, but practical application and explicit rules for retail crypto trading remain underdeveloped and inconsistently enforced.

Summary Points

Here's a clear, well-structured bullet point summary of Yemen's retail crypto trading regulations:

## Yemen's Retail Crypto Trading Regulations: Key Insights (June 2025)

### I. Current Regulatory Status

  • Overall Status: "Gray-Zone" as of June 2025.
  • Indicates a lack of specific, tailored regulations for cryptocurrencies.
  • Acknowledges the theoretical applicability of existing general financial laws.
  • Legal Framework Basis:
  • No explicit laws or regulations specifically addressing cryptocurrencies.
  • Existing Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) laws are theoretically applicable to crypto-related activities.
  • Enforcement Consistency:
  • Enforcement of these general AML/CFT laws in the context of cryptocurrencies is inconsistent.
  • This inconsistency contributes to an unclear and ambiguous regulatory environment.

### II. Key Regulatory Bodies & Their Roles

  • Primary Authorities:
  • Central Bank of Yemen (CBY): Oversees banking system compliance with AML/CFT regulations; plays a crucial role in enforcement and oversight.
  • Financial Information Unit (FIU): Responsible for receiving, analyzing, and disseminating suspicious transaction reports (STRs); provides training to compliance officers.
  • National Committee for AML/CFT: Responsible for the strategy and implementation of AML/CFT efforts.
  • House of Representatives: Enacts relevant legislation.
  • International Affiliations:
  • Middle East and North Africa Financial Action Task Force (MENAFATF): Yemen is a member and has made efforts to comply with FATF recommendations.
  • Financial Action Task Force (FATF): Yemen remains on the FATF gray list due to security concerns preventing onsite visits to confirm sustained implementation of reforms.

### III. Important Legislation & Regulations

  • Law No. 1/2010 On Combating Money Laundering and Financing of Terrorism (Issued 2010):
  • Purpose: Established the primary legal framework for AML/CFT activities in Yemen.
  • Scope: Outlines definitions, obligations, penalties, and measures to combat money laundering and terrorism financing.
  • Impact on Crypto: Its broad definitions of "funds" (including "assets of every kind, whether corporeal or incorporeal") could theoretically encompass digital assets.
  • Requirements: Requires financial and non-financial institutions to classify customers and services based on ML/TF risk.
  • Law No. 17 of 2013 Amending Certain Articles of the Anti-Money Laundering and Counter-Terrorism Financing Law No. (1) of 2010 (Issued 2013):
  • Purpose: Aimed to bring Yemen's AML/CFT framework into compliance with updates to the FATF's 40 Recommendations.
  • Impact: Reinforces the obligations of financial and non-financial institutions to report suspicious transactions to the FIU.

### IV. Requirements for Compliance (Under Existing Frameworks)

  • General Obligations:
  • Financial and non-financial institutions are theoretically obligated to apply existing AML/CFT frameworks to crypto-related activities.
  • Implement risk-based approaches and conduct due diligence for unusual transactions.
  • Specific Reporting:
  • Obligation to report suspicious transactions (STRs) to the Financial Information Unit (FIU).

### V. Notable Restrictions & Limitations

  • Regulatory Gaps:
  • No specific legislation or guidance on retail crypto trading.
  • No public proposals or pilot programs for dedicated cryptocurrency regulations.
  • Asset Classification & Taxation:
  • Asset Classification: Yemen's laws do not explicitly classify cryptocurrencies as a specific asset type (e.g., currency, commodity, security).
  • Taxation: No specific legislation or guidance on the taxation of retail crypto trading activities.
  • Enforcement Challenges:
  • Actual enforcement regarding cryptocurrency activities remains inconsistent despite theoretical applicability of AML/CFT laws.
  • Lack of explicit guidance on how AML/CFT applies to decentralized digital assets.
  • Yemen's status on the FATF gray list indicates challenges in demonstrating sustained implementation of AML/CFT reforms.
  • Operational Environment:
  • Ongoing internal conflict significantly complicates the establishment and consistent enforcement of comprehensive financial regulations.
  • Unreliable infrastructure and security concerns make engaging in cryptocurrency business difficult for most of the population.
  • Reports indicate the use of cryptocurrency by various actors in the conflict, including illicit actors (e.g., Houthi financial networks identified by U.S. Treasury).

### VI. Recent Developments & Outlook

  • Status Refinement: The "Gray-Zone" status is a significant refinement from previous "Unclear" assessments, acknowledging the complex interplay of factors.
  • Observed Crypto Use: Reports indicate the use of cryptocurrency in the country, including by illicit actors.
  • Future Outlook:
  • Primary focus in financial regulation remains through the lens of AML/CFT.
  • No explicit public stance or dedicated regulation from the Central Bank of Yemen specifically addressing retail cryptocurrency trading as of June 2025.
  • The challenging socio-economic and security situation continues to impede comprehensive regulatory development and consistent enforcement.

Full Analysis Report

Retail_Trading_Status in Yemen

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. Identified Current Status

Gray-Zone

2. Detailed Narrative Explanation

The status of retail cryptocurrency trading in Yemen is best described as a Gray-Zone. This is due to the absence of a specific legal or regulatory framework directly addressing cryptocurrencies, coupled with a complex and fragmented governance situation arising from the ongoing conflict. While there is no explicit ban on individuals buying, selling, or holding cryptocurrencies, there is also no official recognition or regulation of these activities by a unified, functioning central authority.

The Yemeni financial and legal systems have been severely disrupted by years of conflict, hindering the development of formal cryptocurrency laws. The Central Bank of Yemen (CBY), which historically plays a crucial role in financial regulation, has not issued official guidelines or policies specifically concerning the use of digital currencies by individuals. This lack of a clear stance from the primary financial regulator leaves the legal status of retail crypto trading ambiguous.

Despite the regulatory vacuum, there are indications of growing interest and use of cryptocurrencies in Yemen, primarily driven by necessity. The ongoing conflict and economic collapse have rendered traditional financial systems unreliable, leading some Yemenis to turn to digital currencies as an alternative for remittances, cross-border transactions, and as a means to bypass disruptions in local financial services. Decentralized finance (DeFi) platforms, in particular, have seen increased usage.

The Houthi-controlled areas present an additional layer of complexity. While the internationally recognized government and its Central Bank have not regulated crypto, the Houthi authorities have reportedly launched their own digital currency, the "e-Rial," though its adoption has faced challenges. More significantly, international bodies like the U.S. Treasury have sanctioned cryptocurrency addresses linked to Houthi financial networks, indicating the use of cryptocurrencies by various actors within the country, albeit not necessarily reflecting a permissive legal stance for the general populace.

The absence of specific crypto regulations means there are no tailored KYC (Know Your Customer) or AML (Anti-Money Laundering) requirements imposed on cryptocurrency platforms operating within or catering to Yemenis. While Yemen has general AML/CFT (Combating the Financing of Terrorism) laws (Law No. 1/2010, amended by Law No. 17 of 2013), their application to the nascent and unregulated crypto space is unclear and likely unenforced in a consistent manner across the divided territories. This lack of oversight exposes users to significant risks, including fraud, scams, and security issues, with no specific legal recourse.

International exchanges remain accessible to Yemenis, and some sources list popular platforms used in the country. However, users operate in an environment of legal uncertainty and potential risks due to the unregulated nature of the market and the ongoing conflict. The focus of international regulatory attention has been more on the illicit use of crypto by sanctioned groups rather than on establishing a framework for retail trading.

Therefore, while not explicitly illegal for individuals, the lack of any formal legal recognition, regulation, or investor protection mechanisms places retail cryptocurrency trading firmly in a gray zone. The activity is happening, driven by dire economic circumstances and the desire to circumvent a failing traditional financial system, but it exists outside any formal legal or regulatory safeguards.

3. Specific, Relevant Text Excerpts

  • UPay Blog (2024-12-06): "Adoption Status: Cryptocurrencies are not officially recognized as legal tender in Yemen, nor are they explicitly banned."
  • UPay Blog (2024-12-06): "Legal and Regulatory Uncertainty: The lack of legal frameworks and regulations regarding cryptocurrency use leaves users in Yemen vulnerable to potential legal risks. Without clear guidelines, cryptocurrency users operate in a legal gray area, and there is no recourse for individuals in cases of fraud or disputes."
  • UPay Blog (2024-12-06): "Right now, Yemen's legal and regulatory landscape for cryptocurrencies is virtually non-existent. The country's financial and legal systems have been severely disrupted by years of conflict, leaving little space for the creation of formal cryptocurrency laws."
  • Traders Union (2025-06-07): "As of January 2025, Yemen lacks a comprehensive legal framework specifically addressing cryptocurrencies. The ongoing civil conflict has led to fragmented control within the country, complicating the establishment of unified regulations. The Central Bank of Yemen has not issued official guidelines or policies regarding the use of digital currencies, leaving their legal status ambiguous."
  • Bitrawr (2025): "Is Bitcoin legal in Yemen? The legality of bitcoin and other cryptocurrencies in Yemen is currently unknown."
  • Cointelegraph (2025-04-18), citing TRM Labs: "Currently, Yemen doesn't have legislation in place for the use of crypto; TRM Labs speculates that increasing sanctions against the Houthis could be the spark that ignites higher crypto adoption in Yemen."
  • AInvest (2025-04-18), citing TRM Labs: "Currently, Yemen lacks any formal regulation on cryptocurrency use."
  • TRM Labs (2025-04-17): "Currently, exchanges that focus exclusively on cryptocurrency are not very common in Houthi-controlled territory. Instead, some money service businesses operating in the region offer cryptocurrency services, in addition to regular financial services. Increasing sanctions against the Houthis will likely drive growing adoption of cryptocurrency in Yemen."

4. Direct, Accessible URL Links to Sources

  1. UPay Blog (2024-12-06): https://upay.co.za/blog/cryptocurrency-adoption-around-the-world-yemen/ (Note: While the article is dated Dec 2024, this likely refers to its last update or a forward-looking statement, the content reflects the ongoing situation.)
  2. Freeman Law - Yemen and Cryptocurrency: https://freemanlaw.com/yemen-and-cryptocurrency/
  3. Traders Union (2025-06-07) - Best Crypto Exchanges in Yemen for June 2025: https://tradersunion.com/interesting-articles/best-crypto-exchanges/best-crypto-exchanges-in-yemen/
  4. Bitrawr (2025) - 4 Best Exchanges To Buy Bitcoin in Yemen (2025): https://bitrawr.com/buy-bitcoin/yemen
  5. Cointelegraph (2025-04-18) - Yemenis are turning to DeFi as US sanctions target Houthi group: https://cointelegraph.com/news/yemenis-are-turning-to-defi-as-us-sanctions-target-houthi-group
  6. AInvest (2025-04-18) - Yemenis Turn to DeFi Amid Sanctions, Conflict: https://ainvest.com/news/yemenis-turn-to-defi-amid-sanctions-conflict-018ef279c88b823a/
  7. TradingView (2025-04-17) - Yemenis are turning to DeFi as US sanctions target Houthi group: https://www.tradingview.com/news/cointelegraph:c9755492d094b:0-yemenis-are-turning-to-defi-as-us-sanctions-target-houthi-group/
  8. TRM Labs (2025-04-17) - From UAVs to Sanctions Evasion: How the Houthis Use Crypto: https://www.trmlabs.com/post/from-uavs-to-sanctions-evasion-how-the-houthis-use-crypto
  9. Shufti Pro (2019-11-15) - Yemen - AML KYC Regulations: https://shuftipro.com/guides/yemen-aml-kyc-regulations/ (Provides context on general AML/KYC laws but not specific to crypto)
  10. AML Watcher - AML/CFT Compliance Guidelines for Yemen: https://amlwatcher.com/aml-cft-compliance-guidelines-for-yemen/ (Provides context on general AML/CFT framework)
  11. U.S. Department of the Treasury (Various Dates 2024, 2025) - Sanctions on Houthi Financial Networks (examples):

(Note: While some sources are blog posts or summaries from crypto intelligence firms, they often cite or analyze official actions or the lack thereof, providing valuable insights in a context where primary official documentation on retail crypto trading is scarce. The ongoing conflict and fragmented governance in Yemen mean that comprehensive, up-to-date official statements specifically on retail crypto trading are not readily available from a single, unified government source.)

Web Sources (14)

Sources discovered via web search grounding

Search queries used (7)
  • Yemen cryptocurrency regulation 2024
  • Yemen Bitcoin laws 2024
  • Central Bank of Yemen cryptocurrency policy 2024
  • retail crypto trading Yemen legal status 2024
  • Yemen AML KYC cryptocurrency regulations
  • Yemen financial authorities statements on cryptocurrency
  • Is cryptocurrency trading legal in Yemen for individuals?
Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Source

Reviews

No reviews yet

Submit Review

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