Lesotho
Retail_Trading_Status
- Analysis ID
- #711
- Version
- Latest
- Created
- 2025-12-12 04:44
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- 4f13688a...
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- Workflow Stage
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Executive Summary
Retail cryptocurrency trading is legal in Lesotho but remains largely unregulated. The Central Bank of Lesotho (CBL) has consistently stated that cryptocurrencies are not legal tender and do not fall under its regulatory purview, meaning investors have no recourse in the event of losses. While there is no explicit ban on individuals buying or holding digital assets, the promotion of crypto investments is effectively restricted as the CBL requires investment advisors to be licensed, a license that is not currently issued for crypto-specific activities. General tax principles apply, and the Revenue Services Lesotho (RSL) expects income from trading to be declared.
Key Pillars
Central Bank of Lesotho (CBL): Issues public warnings and clarifies that crypto is not legal tender.
Revenue Services Lesotho (RSL): Enforces general tax compliance, expecting declaration of crypto-related income under standard income tax rules.
Financial Intelligence Unit (FIU): Monitors for AML/CFT risks, though specific VASP reporting structures are not yet fully operational.
Landmark Laws
Capital Market Regulations (Legal Notice No. 18 of 2014) - Enacted: 2014-01-01
- Requires investment advisors to be licensed. The CBL uses this regulation to warn that promoting cryptocurrencies without a license is a violation of the law.
- Source
Financial Consumer Protection Act (Act No. 6 of 2022) - Enacted: 2022-05-01
- Establishes consumer rights for financial products. However, because crypto is not classified as a 'financial product' or 'security' by the CBL, these protections generally do not apply to crypto investors.
- Source
Considerations
Promotional Ban: While trading is legal, marketing or advising on crypto investments is technically illegal without a license, which is currently unavailable for this asset class.
Banking Access: Local banks are risk-averse and may block transactions related to crypto exchanges due to the lack of a clear regulatory framework.
Tax Liability: Profits from crypto trading are subject to income tax under general tax laws, despite the lack of specific crypto tax forms.
No Consumer Protection: The CBL explicitly states there is no recourse for losses due to scams or exchange failures.
Notes
Lesotho often aligns its financial regulations with South Africa due to the CMA agreement. Since South Africa began licensing crypto asset service providers (CASPs) in 2024, it is highly probable that Lesotho will eventually follow suit to prevent regulatory arbitrage, but no draft bill has been gazetted as of late 2025.
Remaining Uncertainties
- Will the CBL introduce a VASP licensing regime similar to South Africa's recent FSCA framework?
- Are there specific plans to amend the Financial Consumer Protection Act to explicitly include or exclude digital assets?
- How strictly is the ban on 'promotion' enforced against international exchanges marketing digitally to Basotho residents?
Detailed Explanation
Detailed Explanation
In Lesotho, retail cryptocurrency trading is allowed but remains largely unregulated. The Central Bank of Lesotho (CBL) has consistently clarified that cryptocurrencies are not legal tender and do not fall under its regulatory purview, meaning investors have no formal recourse in the event of losses. This unregulated status creates a significant gap in consumer protection, as the Financial Consumer Protection Act (Act No. 6 of 2022) does not apply because crypto assets are not classified as 'financial products' or 'securities' by the CBL. The regulatory framework is primarily defined by what it does not cover, with existing laws being used to impose restrictions rather than create a supportive environment. For instance, the Capital Market Regulations (Legal Notice No. 18 of 2014) require investment advisors to be licensed, and the CBL uses this to warn that promoting cryptocurrencies without such a license is a violation, effectively creating a promotional ban as a license for crypto-specific advising is not issued. On taxation, the Revenue Services Lesotho (RSL) expects income from crypto trading to be declared under general income tax principles, despite the absence of specific crypto tax forms. The Financial Intelligence Unit (FIU) monitors for anti-money laundering and counter-terrorist financing risks, though specific reporting structures for virtual asset service providers are not yet fully operational. Practical challenges include risk-averse local banks that may block transactions related to crypto exchanges due to the unclear regulatory framework. It is highly probable that Lesotho will eventually align with South Africa's move to license crypto asset service providers, which began in 2024, to prevent regulatory arbitrage, but no draft legislation had been gazetted as of late 2025.
Summary Points
I. Regulatory Status
* Retail cryptocurrency trading is Allowed-Unregulated.
* It is legal for individuals to buy and hold digital assets.
* Cryptocurrencies are not legal tender and are not regulated by the Central Bank of Lesotho (CBL).
* There is no formal consumer protection or recourse for investor losses.
II. Key Regulatory Bodies
* Central Bank of Lesotho (CBL):
* Issues public warnings about the risks of cryptocurrencies.
* Clarifies that crypto is not under its regulatory purview.
* Uses existing regulations to restrict the promotion of crypto investments.
* Revenue Services Lesotho (RSL):
* Enforces general tax compliance.
* Expects income from crypto trading to be declared under standard income tax rules.
* Financial Intelligence Unit (FIU):
* Monitors for AML/CFT risks related to virtual assets.
* Specific reporting structures for Virtual Asset Service Providers (VASPs) are not yet fully operational.
III. Important Legislation
* Capital Market Regulations (Legal Notice No. 18 of 2014), enacted 2014-01-01:
* Requires investment advisors to be licensed.
* The CBL uses this to state that promoting cryptocurrencies without a license is a violation of the law.
* Financial Consumer Protection Act (Act No. 6 of 2022), enacted 2022-05-01:
* Establishes consumer rights for financial products.
* These protections generally do not apply to crypto investors, as crypto is not classified as a 'financial product' or 'security' by the CBL.
IV. Compliance Requirements
* Taxation: Profits from crypto trading are subject to income tax and must be declared to the RSL under general tax laws.
* Promotion/Advising: Any marketing or investment advice related to cryptocurrencies technically requires a license under the Capital Market Regulations, which is not available for this asset class.
V. Notable Restrictions or Limitations
* Promotional Ban: Marketing or advising on crypto investments is effectively restricted due to the licensing requirement.
* Banking Access: Local banks are risk-averse and may block transactions related to crypto exchanges due to the lack of a clear regulatory framework.
* No Consumer Protection: The CBL explicitly states there is no recourse for losses due to scams or exchange failures.
VI. Recent Developments or Notes
* Lesotho often aligns its financial regulations with South Africa due to the Common Monetary Area (CMA) agreement.
* Since South Africa began licensing Crypto Asset Service Providers (CASPs) in 2024, it is highly probable that Lesotho will eventually follow suit to prevent regulatory arbitrage.
* As of late 2025, no draft bill for crypto-specific regulation had been gazetted.
Full Analysis Report
Full Analysis Report
In Lesotho, the regulatory environment for cryptocurrencies is best described as 'Allowed-UnRegulated.' The government has chosen not to ban the asset class outright but has also declined to integrate it into the formal financial system. The Central Bank of Lesotho (CBL) has maintained a consistent stance since 2017, reiterated in a May 2024 press statement, that cryptocurrencies are not legal tender and operate outside its regulatory scope. Consequently, individuals are free to buy, sell, and hold digital assets at their own risk, but they do so without any safety net or consumer protection mechanisms.
A significant nuance in Lesotho's approach is the restriction on promotion versus participation. While an individual can trade on international platforms, any entity attempting to market crypto investment opportunities within Lesotho falls afoul of the Capital Market Regulations of 2014. The CBL has warned that promoting these assets constitutes providing unlicensed financial advice, a prosecutable offense. This creates a hostile environment for local crypto businesses or exchanges, effectively preventing a domestic industry from forming while leaving the door open for retail users to access offshore markets.
From a taxation perspective, the lack of specific regulation does not equate to a tax holiday. The Revenue Services Lesotho (RSL) operates under a broad mandate where income from any source is taxable. Legal analysts and advisory firms in the region confirm that crypto gains should be declared as part of general income or capital gains, subject to standard rates. However, the absence of specific guidance or 'crypto' checkboxes on tax forms leads to ambiguity and potential under-reporting.
The banking sector remains a practical hurdle for retail traders. As Lesotho is part of the Common Monetary Area (CMA) alongside South Africa, cross-border capital flows are monitored. While there is no explicit 'bank ban' directive preventing the processing of crypto transactions, local banks often exercise extreme caution, blocking transfers to known crypto exchanges to avoid running afoul of AML/CFT obligations. This forces many Basotho traders to rely on Peer-to-Peer (P2P) markets or mobile money solutions rather than direct bank transfers.
In Lesotho, the regulatory environment for cryptocurrencies is best described as 'Allowed-UnRegulated.' The government has chosen not to ban the asset class outright but has also declined to integrate it into the formal financial system. The Central Bank of Lesotho (CBL) has maintained a consistent stance since 2017, reiterated in a May 2024 press statement, that cryptocurrencies are not legal tender and operate outside its regulatory scope. Consequently, individuals are free to buy, sell, and hold digital assets at their own risk, but they do so without any safety net or consumer protection mechanisms. A significant nuance in Lesotho's approach is the restriction on *promotion* versus *participation*. While an individual can trade on international platforms, any entity attempting to market crypto investment opportunities within Lesotho falls afoul of the Capital Market Regulations of 2014. The CBL has warned that promoting these assets constitutes providing unlicensed financial advice, a prosecutable offense. This creates a hostile environment for local crypto businesses or exchanges, effectively preventing a domestic industry from forming while leaving the door open for retail users to access offshore markets. From a taxation perspective, the lack of specific regulation does not equate to a tax holiday. The Revenue Services Lesotho (RSL) operates under a broad mandate where income from any source is taxable. Legal analysts and advisory firms in the region confirm that crypto gains should be declared as part of general income or capital gains, subject to standard rates. However, the absence of specific guidance or 'crypto' checkboxes on tax forms leads to ambiguity and potential under-reporting. The banking sector remains a practical hurdle for retail traders. As Lesotho is part of the Common Monetary Area (CMA) alongside South Africa, cross-border capital flows are monitored. While there is no explicit 'bank ban' directive preventing the processing of crypto transactions, local banks often exercise extreme caution, blocking transfers to known crypto exchanges to avoid running afoul of AML/CFT obligations. This forces many Basotho traders to rely on Peer-to-Peer (P2P) markets or mobile money solutions rather than direct bank transfers.
Source Evidence
Primary and secondary sources cited in this analysis
"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."
"Members of the public are hereby warned that... cryptocurrencies directly expose their promoters to violation of Sections 27 and 28 of the Central Bank of Lesotho Capital Market Regulations of 2014."
"At present, Lesotho does not formally recognise or regulate cryptocurrencies... promoting crypto-related investments may even violate existing laws."
"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."
Sources (Raw Data)
Sources (Raw Data)
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