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Tanzania

Retail_Trading_Status

Gray-Zone Unknown
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2025-06-26 13:25
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Executive Summary

Tanzania's retail cryptocurrency trading exists in a 'Gray-Zone.' While not explicitly illegal, the Bank of Tanzania (BoT) cautions against it, citing risks and lack of legal tender status. A High Court ruling suggests that crypto transactions aren't illegal per se, even without specific regulations. The Finance Act 2024 introduced a 3% withholding tax on digital asset transactions, reflecting a revenue-focused approach in the absence of comprehensive regulations, AML/KYC or licensing frameworks.

Key Pillars

The primary regulator is the Bank of Tanzania (BoT), which has adopted a cautious approach, issuing warnings against cryptocurrency use. There are no specific crypto-focused AML/KYC regulations for platforms operating in Tanzania. Licensing or registration requirements for cryptocurrency exchanges are absent as of early 2025.

Landmark Laws

  • Bank of Tanzania Public Notice (November 2019): Advised the public against trading, marketing, and using virtual currency because it contravenes existing foreign exchange regulations. It reiterated that the Tanzanian Shilling is the only acceptable legal tender.
  • Finance Act 2024 (effective July 1, 2024): Introduced a 3% withholding tax on payments made by owners of digital asset exchange platforms to resident persons for the exchange or transfer of digital assets, including cryptocurrencies.

Considerations

Cryptocurrencies are not legal tender in Tanzania, according to the Bank of Tanzania. The Finance Act 2024 implies a level of official recognition of crypto transactions for taxation purposes. The BoT warns of risks associated with money laundering, terrorism financing, and counterfeit funds. Experts call for KYC/AML rules and public awareness campaigns to balance innovation with consumer protection.

Notes

In June 2021, President Samia Suluhu Hassan called on the central bank to prepare for cryptocurrencies. The Bank of Tanzania is exploring the possibility of a Central Bank Digital Currency (CBDC). A High Court decision in Yellow Card Tanzania Limited v. Nyamwero Michael Nyamwero (Commercial Case No. 12171 of 2024) pronounced that engaging in electronic transactions using cryptocurrencies is not illegal in Tanzania. Some commentators argue that the 'tax-first approach without legal frameworks' creates an ambiguous situation where transactions are taxed but investor protection and clear operational guidelines are lacking.

Detailed Explanation

Tanzania's stance on retail cryptocurrency trading is characterized by a 'Gray-Zone' status, where individuals are not explicitly prohibited from buying, selling, and holding cryptocurrencies, yet the regulatory environment remains cautious and undeveloped. The Bank of Tanzania (BoT) has historically warned against cryptocurrency use. In November 2019, the BoT issued a public notice advising against trading, marketing, and using cryptocurrencies, citing a contravention of existing foreign exchange regulations and emphasizing the Tanzanian Shilling as the sole legal tender. This position was reaffirmed more recently by the BoT Governor, Emmanuel Tutuba, who characterized cryptocurrency use as an 'illegal business' and warned of associated risks such as money laundering and terrorism financing.

However, a significant legal development occurred with the High Court decision in Yellow Card Tanzania Limited v. Nyamwero Michael Nyamwero (Commercial Case No. 12171 of 2024). The Court pronounced that engaging in electronic transactions using cryptocurrencies is not illegal in Tanzania, and that the lack of a specific legal framework does not render them illegal. This ruling affirmed the validity of contracts involving cryptocurrency transactions, provided they meet standard contractual elements, even without explicit regulations. Despite the BoT's warnings, cryptocurrency trading activity persists, with international exchanges offering services to Tanzanian residents. These exchanges often facilitate transactions in Tanzanian Shillings (TZS) through local payment methods.

As of early 2025, the Tanzanian government is reportedly exploring regulations, but no official laws fully legalize or comprehensively regulate crypto exchanges or retail trading. In June 2021, President Samia Suluhu Hassan called on the central bank to prepare for cryptocurrencies. The Finance Act 2024, effective from July 1, 2024, introduced a 3% withholding tax on payments made by owners of digital asset exchange platforms to resident persons for the exchange or transfer of digital assets, including cryptocurrencies. PwC Tanzania noted this inclusion, while some commentators observe that the 'tax-first approach without legal frameworks' creates an ambiguous situation, lacking investor protection and clear operational guidelines.

Experts advocate for a clear regulatory framework, including Know Your Customer (KYC) and Anti-Money Laundering (AML) rules for exchanges, and public awareness campaigns to balance innovation with consumer protection. Currently, specific crypto-focused AML/KYC regulations are lacking, so users often rely on the internal policies of international exchanges. The Bank of Tanzania is also exploring the possibility of a Central Bank Digital Currency (CBDC), separate from privately issued cryptocurrencies. In summary, individuals in Tanzania are engaging in cryptocurrency trading, which a High Court ruling suggests is not illegal per se. However, the central bank maintains strong warnings, and there is no specific regulatory framework governing the activity. The withholding tax on digital asset transactions adds complexity, indicating governmental acknowledgment for revenue purposes, but broader consumer protection and operational regulations remain undeveloped, firmly placing the retail trading status in a 'Gray-Zone.'

Summary Points

Retail Trading Status: Tanzania (Report Date: 2025-06-26)

Overall Status: Gray-Zone - Not explicitly illegal, but lacks comprehensive regulation and faces official caution.

1. Regulatory Bodies and Roles:

  • Bank of Tanzania (BoT):
    • Role: Central bank, responsible for monetary policy and financial system oversight.
    • Stance: Cautious; has issued warnings against cryptocurrency trading, marketing, and use.
    • Viewpoint: Considers cryptocurrency use an "illegal business" from the perspective of formal financial systems.
    • Concerns: Money laundering, terrorism financing, contravention of foreign exchange regulations.
    • Actions: Exploring the possibility of a Central Bank Digital Currency (CBDC).
  • High Court of Tanzania:
    • Role: Judicial authority.
    • Ruling (Yellow Card Tanzania Limited v. Nyamwero Michael Nyamwero): Engaging in electronic transactions using cryptocurrencies is not illegal in Tanzania.
    • Implication: Contracts involving cryptocurrency transactions are not automatically void due to the absence of explicit regulations, provided they meet standard contractual elements.
  • Tanzanian Government:
    • Role: Legislative and executive authority.
    • Actions: Reportedly exploring regulations for cryptocurrencies.
    • Presidential Directive (June 2021): President Samia Suluhu Hassan called on the central bank to prepare for cryptocurrencies.

2. Key Legislation and Regulations:

  • Lack of Specific Crypto Regulations: No official laws fully legalize or comprehensively regulate crypto exchanges or retail trading.
  • Finance Act 2024 (Effective July 1, 2024):
    • Introduced a 3% withholding tax on payments made by owners of digital asset exchange platforms to resident persons for the exchange or transfer of digital assets, including cryptocurrencies.
    • Defines digital assets broadly, including cryptocurrencies, tokens, and NFTs.
    • Implication: Official recognition of crypto transactions for taxation purposes, but not a full regulatory framework.

3. Requirements for Compliance:

  • No Specific Crypto-Focused AML/KYC Regulations:
    • Platforms operating in Tanzania often rely on the internal policies of international exchanges, which may adhere to global standards.
    • Calls from experts for Tanzania to establish a clear regulatory framework, including KYC and AML rules for exchanges.

4. Notable Restrictions or Limitations:

  • BoT Warnings: The Bank of Tanzania maintains strong warnings against cryptocurrency trading.
  • Lack of Legal Tender Status: Cryptocurrencies are not legal tender in Tanzania; the Tanzanian Shilling is the only legally recognized tender.
  • Absence of Consumer Protection: Lack of specific regulations leaves investors without clear operational guidelines and consumer protection.

5. Recent Developments or Changes:

  • High Court Ruling (Yellow Card Case): Affirmed that engaging in electronic transactions using cryptocurrencies is not illegal.
  • Finance Act 2024 (3% Withholding Tax): Introduced a tax on digital asset transactions, indicating governmental acknowledgement for revenue purposes.
  • BoT Exploration of CBDC: The Bank of Tanzania is exploring the possibility of a Central Bank Digital Currency (CBDC).
  • Government Exploration of Regulations: The Tanzanian government is reportedly exploring regulations for cryptocurrencies.

6. Key Issues and Concerns:

  • Ambiguous Legal Status: "Tax-first approach without legal frameworks" creates an ambiguous situation.
  • Lack of Investor Protection: Absence of clear operational guidelines and consumer protection.
  • Money Laundering and Terrorism Financing Risks: Cited by the BoT as primary concerns.
  • Need for Clear Regulatory Framework: Experts call for a framework balancing innovation, financial inclusion, consumer protection, and risk mitigation.

Full Analysis Report

Retail_Trading_Status: Tanzania

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

2. Detailed Narrative Explanation:

Tanzania's stance on retail cryptocurrency trading is nuanced and falls into a "Gray-Zone." While not explicitly illegal for individuals to buy, sell, and hold cryptocurrencies, the regulatory environment is characterized by official caution, a lack of specific crypto-focused regulations, and recent developments that suggest a slow evolution rather than an outright ban or formal embrace.

Historically, the Bank of Tanzania (BoT) has issued warnings regarding cryptocurrencies. In November 2019, the BoT issued a public notice stating that cryptocurrencies are not legal tender in Tanzania and advised the public against trading, marketing, and using them, citing contravention of existing foreign exchange regulations. The BoT reiterated that the Tanzanian Shilling is the only legally recognized tender. This stance has been reaffirmed more recently, with the BoT Governor emphasizing that cryptocurrency use remains an "illegal business" from the perspective of formal financial systems and warning of risks like money laundering and terrorism financing. Some reports even characterize the BoT's position as a "de facto ban."

However, a significant development occurred with a High Court decision in the case of Yellow Card Tanzania Limited v. Nyamwero Michael Nyamwero (Commercial Case No. 12171 of 2024). The Court pronounced that engaging in electronic transactions using cryptocurrencies is not illegal in Tanzania and that the lack of a specific legal framework does not render them illegal. This ruling affirmed that contracts involving cryptocurrency transactions are not automatically void due to the absence of explicit regulations, provided they meet standard contractual elements. This judicial guidance suggests a level of permissiveness for individuals engaging in crypto activities, even as the central bank maintains its cautious warnings.

Despite the BoT's warnings and the absence of a dedicated regulatory framework for cryptocurrencies, trading activity persists. Several international cryptocurrency exchanges offer services to Tanzanian residents, allowing them to buy, sell, and hold various digital assets, often using Tanzanian Shillings (TZS) through local payment methods like bank transfers or mobile money.

The Tanzanian government is reportedly exploring regulations, but as of early 2025, no official laws fully legalize or comprehensively regulate crypto exchanges or retail trading. There's an acknowledgement of the growing interest in digital currencies and blockchain technology, and even President Samia Suluhu Hassan had, in June 2021, noted the trend and called on the central bank to prepare for cryptocurrencies.

A recent development on the fiscal side is the Finance Act 2024, effective from July 1, 2024, which introduced a 3% withholding tax on payments made by owners of digital asset exchange platforms to resident persons for the exchange or transfer of digital assets, including cryptocurrencies. While this implies a level of official recognition of crypto transactions for taxation purposes, it does not equate to a full regulatory framework for the activity itself. Some commentators argue that this "tax-first approach without legal frameworks" creates an ambiguous situation where transactions are taxed but investor protection and clear operational guidelines are lacking.

There are calls from experts for Tanzania to establish a clear regulatory framework, including Know Your Customer (KYC) and Anti-Money Laundering (AML) rules for exchanges, and public awareness campaigns. Such a framework would aim to balance innovation and financial inclusion with consumer protection and risk mitigation. The current lack of specific crypto-focused AML/KYC regulations for platforms operating in Tanzania means that users often rely on the internal policies of international exchanges, which may adhere to global standards.

The Bank of Tanzania is also exploring the possibility of a Central Bank Digital Currency (CBDC), which is distinct from privately issued cryptocurrencies. This exploration, however, does not directly clarify the status of existing retail cryptocurrency trading.

In summary, individuals in Tanzania appear to be engaging in cryptocurrency trading, and a High Court ruling suggests this is not illegal per se. However, the central bank maintains strong warnings against it, and there is no specific regulatory framework governing the activity, including licensing for exchanges or comprehensive AML/KYC requirements tailored to crypto. The introduction of a withholding tax on digital asset transactions adds another layer to this complex picture, indicating a governmental acknowledgement of these activities for revenue purposes, while broader consumer protection and operational regulations remain undeveloped. This combination of factors places the retail trading status firmly in a "Gray-Zone."

3. Specific, Relevant Text Excerpts:

  • Bank of Tanzania (November 2019): "This is to advise members of the public against trading, marketing and usage of virtual currency because doing so is contrary to existing foreign exchange regulations. The Bank of Tanzania, therefore, reiterates that the only acceptable and used legal tender in the country is the Tanzanian Shilling...By this notice, the Bank of Tanzania cautions members of the public to beware of involvement in the virtual currencies, as they are not legally authorized in Tanzania."
  • Dentons (referencing the Yellow Card Case, March 2025): "The Court noted that the lack of a legal framework on cryptocurrencies does not render them illegal in Tanzania. The Court pointed out that the regulatory framework on cryptocurrencies is still evolving in Tanzania and that the government and the Bank of Tanzania have issued guidance on the matter. The Court pronounced that engaging in electronic transactions using cryptocurrencies is not illegal in Tanzania."
  • PwC Tanzania (January 2025): "In Tanzania, the Finance Act 2024 ( “the Act”) which was effective since 1 July 2024 introduced a 3% withholding tax on payments by an owner of a digital asset exchange platform made to a resident person (who is the owner of the digital asset) for the exchange or transfer of the asset... The Act defines digital assets broadly, enclosing cryptocurrencies, tokens, and Non fungible tokens (NFTs)."
  • UEEx Technology (April 2025): "Cryptocurrency exchanges operate in a legal gray area in Tanzania. While the Bank of Tanzania (BoT) previously banned crypto transactions in 2019, there have been signs of a shift in attitude. In 2022, the government announced plans to explore crypto regulations, indicating a more open approach... However, as of 2025, there are no official laws fully legalizing or regulating crypto exchanges."
  • The Citizen (May 2025, quoting BoT Governor Emmanuel Tutuba): "On the issue of cryptocurrencies, the governor reaffirmed BoT's long-standing position that their use remains illegal in Tanzania, citing risks associated with money laundering, terrorism financing, and counterfeit funds. 'We've repeatedly said it's an illegal business. The public should avoid it. Those engaging in it do so at their own risk'."
  • ZAWYA (June 2025): "But Dodoma has yet to provide a legal framework defining or recognising cryptocurrencies. The Bank of Tanzania maintains a cautious stance on cryptocurrencies, having cautioned the public against trading, marketing, and using cryptocurrencies... The court noted that the lack of a legal framework on cryptocurrencies does not render them illegal in the country."

4. Direct, Accessible URL Links to Sources:

Web Sources (15)

Sources discovered via web search grounding

Search queries used (7)
  • Tanzania cryptocurrency regulation status 2025
  • Bank of Tanzania official statements on cryptocurrency 2024 2025
  • Tanzania crypto trading laws and regulations for individuals 2025
  • Tanzania AML KYC requirements cryptocurrency exchanges 2025
  • Tanzania financial regulatory authority cryptocurrency policies 2025
  • Tanzania government stance on retail cryptocurrency trading 2025
  • common practices retail crypto trading Tanzania 2025
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