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Sierra Leone

Retail_Trading_Status

Gray-Zone High Confidence
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#784
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2025-12-12 05:14
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Executive Summary

Retail cryptocurrency trading in Sierra Leone currently falls into a regulatory 'Gray-Zone'. While the enacted 'Anti-Money Laundering and Combating of Financing of Terrorism and Financing the Proliferation of Weapons of Mass Destruction Act 2024' formally defines Virtual Asset Service Providers (VASPs) and mandates licensing, no dedicated retail crypto exchanges have been confirmed as licensed to date. The Bank of Sierra Leone (BSL) has established a regulatory sandbox that has licensed general fintechs, but specific frameworks for Web3 and crypto trading are still under active development as of late 2025.

Key Pillars

Bank of Sierra Leone (BSL) - Primary regulator for financial institutions and the regulatory sandbox.
Financial Intelligence Agency (FIA) - Responsible for AML/CFT enforcement and monitoring VASP compliance.
Mandatory VASP Registration - Section 59(3) of the AML Act 2024 requires all virtual asset providers to register and obtain a license.
FinTech Regulatory Sandbox - The primary mechanism for testing and potentially licensing innovative financial products, including blockchain applications.

Landmark Laws

Anti-Money Laundering and Combating of Financing of Terrorism and Financing the Proliferation of Weapons of Mass Destruction Act 2024 (Act No. 4 of 2024) - Enacted: 2024-04-16
- Repealed the 2012 AML Act. Explicitly defines 'virtual asset' and 'virtual asset service provider' (VASP). Section 59(3) mandates that VASPs must register and obtain a license from the relevant supervisory authority (BSL) before commencing operations, criminalizing unlicensed operation.
- Source

National Payment Systems Act 2022 (Act No. 14 of 2022) - Enacted: 2022-06-01
- Establishes the legal framework for payment systems and electronic money. While focused on traditional digital payments, it provides the broader statutory basis for the BSL's oversight of fintech and digital financial services.

Considerations

Licensing Lag: Despite the 2024 Act requiring licenses, reports from late 2025 indicate the BSL is still holding 'working sessions' to draft specific regulatory amendments for Web3, suggesting the licensing window is not fully operational.
Sandbox Reliance: Market entry is currently routed through the Regulatory Sandbox, which has graduated fintechs like Mosabi (credit/savings) but has not yet publicly graduated a retail crypto exchange.
De Facto Ban Risk: Operating a VASP without a license is a criminal offense under the 2024 Act. Since no licenses appear to be issued, strict enforcement could interpret all current activity as illegal.
FATF Compliance: Sierra Leone was re-rated to 'Largely Compliant' on FATF Recommendation 15 (New Technologies) in Nov 2024, acknowledging the legal framework is in place even if operational implementation is nascent.

Notes

The 2023 FIU report mentions a 'ban' in the past tense or as a comparative example, which creates confusion. However, the 2024 Act clearly establishes a licensing regime, superseding any previous ad-hoc prohibitions. The status is 'Gray-Zone' primarily due to the gap between the law's enactment (April 2024) and the lack of operational licensing for retail exchanges as of late 2025.

Remaining Uncertainties

  • Have any specific 'Virtual Asset Service Provider' licenses been issued outside of the general Sandbox framework?
  • What are the specific capital requirements and 'fit and proper' criteria for crypto exchanges under the new 2024 Act?
  • Does the BSL actively enforce the ban on unlicensed VASPs against foreign exchanges accessible by Sierra Leonean residents?

Detailed Explanation

Retail cryptocurrency trading in Sierra Leone exists in a regulatory 'Gray-Zone'. The definitive legal framework is established by the Anti-Money Laundering and Combating of Financing of Terrorism and Financing the Proliferation of Weapons of Mass Destruction Act 2024, which was enacted on April 16, 2024. This Act formally defines 'virtual assets' and 'virtual asset service providers' (VASPs) and mandates under Section 59(3) that all VASPs must register and obtain a license from the relevant supervisory authority, which is the Bank of Sierra Leone (BSL), before commencing operations. Operating without a license is a criminal offense. However, as of late 2025, no dedicated retail cryptocurrency exchanges have been confirmed as licensed, creating a significant gap between the law's requirements and its operational implementation. The primary mechanism for market entry is the FinTech Regulatory Sandbox operated by the BSL, which has licensed general fintech companies but has not yet publicly graduated a retail crypto exchange. The Bank of Sierra Leone is reportedly still holding working sessions to draft specific regulatory amendments for Web3 and crypto assets, indicating that the licensing regime is not yet fully operational. The Financial Intelligence Agency (FIA) is responsible for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) enforcement and monitoring VASP compliance. The broader statutory basis for the BSL's oversight of digital financial services is provided by the National Payment Systems Act 2022. While the legal framework for regulation is in place, the current absence of licensed VASPs means that retail crypto trading operates in an uncertain environment where strict enforcement of the 2024 Act could interpret all current activity as illegal. This situation is acknowledged by the Financial Action Task Force (FATF), which re-rated Sierra Leone to 'Largely Compliant' on Recommendation 15 concerning new technologies in November 2024, recognizing the established legal framework even as its practical application remains nascent.

Summary Points

I. Regulatory Status
* Status: Gray-Zone
* Summary: A formal licensing regime for Virtual Asset Service Providers (VASPs) is mandated by law, but no licenses have been issued to retail crypto exchanges as of late 2025, creating a significant implementation gap.

II. Key Regulatory Bodies
* Bank of Sierra Leone (BSL): The primary regulator for financial institutions and the operator of the Regulatory Sandbox for fintechs.
* Financial Intelligence Agency (FIA): Responsible for AML/CFT enforcement and monitoring VASP compliance.

III. Important Legislation
* Anti-Money Laundering and Combating of Financing of Terrorism and Financing the Proliferation of Weapons of Mass Destruction Act 2024 (Act No. 4 of 2024)
* Enacted: 2024-04-16
* Repealed the 2012 AML Act.
* Explicitly defines virtual asset and virtual asset service provider (VASP).
* Section 59(3) mandates that VASPs must register and obtain a license from the BSL before commencing operations.
* Operating a VASP without a license is a criminal offense.
* National Payment Systems Act 2022 (Act No. 14 of 2022)
* Enacted: 2022-06-01
* Establishes the legal framework for payment systems and electronic money, providing the basis for the BSL's oversight of fintech and digital financial services.

IV. Compliance Requirements
* Mandatory VASP Licensing: All virtual asset service providers are required by law to be licensed by the Bank of Sierra Leone.
* Regulatory Sandbox: The primary current pathway for market entry is through the BSL's FinTech Regulatory Sandbox.

V. Notable Restrictions or Limitations
* Licensing Lag: Despite the 2024 Act, the BSL is still developing specific frameworks for Web3 and crypto trading as of late 2025.
* De Facto Ban Risk: The lack of issued licenses means that any current VASP operation could be interpreted as illegal under the law.

VI. Recent Developments or Notes
* The FATF re-rated Sierra Leone to Largely Compliant on Recommendation 15 (New Technologies) in November 2024, acknowledging the legal framework is in place.
* Reports from late 2025 indicate the BSL is holding 'working sessions' to draft specific regulatory amendments, suggesting the licensing window is not yet fully operational.

Full Analysis Report

Sierra Leone's regulatory environment for cryptocurrency is in a critical transition phase, shifting it from 'Unregulated' to a complex 'Gray-Zone'. The pivotal development was the enactment of the Anti-Money Laundering and Combating of Financing of Terrorism and Financing the Proliferation of Weapons of Mass Destruction Act 2024 in April 2024. This legislation formally brought virtual assets into the regulatory perimeter by defining 'Virtual Asset Service Providers' (VASPs) and explicitly mandating under Section 59(3) that they must register and obtain a license from the Bank of Sierra Leone (BSL). This move was sufficient for the Financial Action Task Force (FATF) to upgrade Sierra Leone's rating on Recommendation 15 to 'Largely Compliant' in November 2024.

However, the existence of the law has not yet translated into a fully operational retail market. As of late 2025, there is no public record of a dedicated retail cryptocurrency exchange receiving a full license. Instead, the BSL has utilized a FinTech Regulatory Sandbox (launched circa 2018) as the primary gateway for innovation. While the sandbox has successfully licensed fintech companies like Mosabi (focused on financial inclusion and credit), it remains unclear if any pure-play crypto trading platforms have successfully graduated. Reports from August 2025 indicate that the BSL and the Directorate of Science, Technology and Innovation (DSTI) were still conducting working sessions to 'draft specific regulatory amendments' to better accommodate Web3 technologies, suggesting the permanent regime is not yet ready for mass retail adoption.

This creates a precarious 'Gray-Zone' for operators and retail traders. Strictly speaking, the 2024 Act makes operating a VASP without a license a criminal offense punishable by fines or imprisonment. Yet, without a clear, functioning licensing process for exchanges, the market exists in a state of limbo where the law requires a license that may be practically unobtainable. Previous reports from the Financial Intelligence Unit (FIU) in 2023 alluded to a 'ban' or 'fear of dangers' regarding crypto, but the 2024 Act effectively superseded this by establishing a path to legalization, albeit one that is currently obstructed by operational delays.

Source Evidence

Primary and secondary sources cited in this analysis

Anti-Money Laundering and Combating of Financing of Terrorism and Financing the Proliferation of Weapons of Mass Destruction Act 2024 primary (law_text)
2024-04-16

"A virtual assets provider including virtual asset service provider shall... register and obtain licence from the relevant supervisory authority before commencement of operations."

Sierra Leone's progress in strengthening measures to tackle money laundering and terrorist financing primary (official_government)
2024-11-01

"Sierra Leone enacted the AML/CFT/PF Act which addressed most of the deficiencies identified in the MER on R.15... Recommendation 15 [New Technologies] has been re-rated from partially compliant to largely compliant."

Second National Risk Assessment Report 2023 primary (official_government)
2023-01-01

"For fear of the dangers, some jurisdictions, like Sierra Leone, have banned its existence in their domain. However, the FIU Sierra Leone... decided to dig out the loopholes and proffer solutions."

Sierra Leone Takes Strategic Steps Toward Web3-Enabled Financial Innovation secondary (news)
2025-08-06

"Immediate next steps include: Detailed working sessions to draft specific regulatory amendments."

Web Sources (2)

Sources discovered via web search grounding

Search queries used (12)
  • Sierra Leone cryptocurrency regulation Bank of Sierra Leone
  • Sierra Leone regulatory sandbox fintech crypto
  • Sierra Leone FATF mutual evaluation report virtual assets
  • Bank of Sierra Leone public notice cryptocurrency
  • Sierra Leone National Payment Systems Act 2022 crypto
  • "Bank of Sierra Leone" virtual asset service provider guidelines
  • Bank of Sierra Leone sandbox cohort crypto
  • Sierra Leone Anti-Money Laundering and Combating of Financing of Terrorism Act 2024 virtual assets
  • "Bank of Sierra Leone" list of licensed fintechs
  • Sierra Leone National Payment Systems Act 2022 virtual currency definition
  • "Bank of Sierra Leone" crypto warning 2024
  • "Bank of Sierra Leone" "virtual asset" circular
christex.foundation

https://www.christex.foundation/insight/all/sierra-leone-takes-strategic-steps-toward-web3-enabled-financial-innovation

fiu.gov.sl

https://fiu.gov.sl/wp-content/uploads/2024/08/SECOND-NRA-REPORT-2023-PV.pdf

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