Solomon Islands

Retail_Trading_Status

Allowed-Unregulated High Confidence

Analysis ID: #789
Version: Latest
Created: 2025-12-12 05:15
Run: 70a2b6e1...
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Workflow Stage: Step 1

Executive Summary

Retail cryptocurrency trading is legal but unregulated in the Solomon Islands. The Central Bank of Solomon Islands (CBSI) has explicitly stated that cryptocurrencies are not legal tender and are not supervised by any financial authority, warning investors that they act at their own risk. While there is no specific legislative framework governing virtual assets, the government is actively piloting a Central Bank Digital Currency (CBDC) named 'Bokolo Cash' to address financial inclusion, indicating a preference for state-backed digital currency over private crypto assets.

Key Pillars

Central Bank of Solomon Islands (CBSI) - Primary financial regulator; issues warnings and manages the CBDC pilot.
Solomon Islands Financial Intelligence Unit (SIFIU) - Responsible for general AML/CFT oversight, though specific virtual asset guidelines are absent.
No specific VASP Licensing Regime - Crypto exchanges operate without a specific license; general business registration applies.

Landmark Laws

Central Bank of Solomon Islands Act 2012 (Act No. 4 of 2012) - Enacted: 2012-05-17
- Establishes the CBSI's sole authority to issue currency. Used as the legal basis to declare that private cryptocurrencies have no legal tender status.
- Source

Public Notice on Cryptocurrencies (CBSI Press Statement) - Enacted: 2019-11-01
- Explicit warning that cryptocurrencies (Bitcoin, Ethereum, Ripple) are not regulated, not legal tender, and investment is at the user's own risk.
- Source

Considerations

No specific tax framework for crypto; general income and capital gains tax principles likely apply.
Banking access is not explicitly banned but is highly restricted due to CBSI risk warnings; banks may refuse crypto-related transactions.
High prevalence of crypto-themed scams (e.g., 'Sol York', 'OneCoin') has led to a defensive regulatory posture.
The government is prioritizing its own CBDC ('Bokolo Cash') over regulating private crypto markets.

Notes

The 'Bokolo Cash' project uses the SORA blockchain (Hyperledger Iroha 2) and requires KYC, distinguishing it sharply from permissionless crypto assets. Users should not confuse the legal status of Bokolo Cash (state-sanctioned) with Bitcoin (unregulated).

Remaining Uncertainties

Whether the 'Bokolo Cash' pilot will lead to a broader regulatory framework that explicitly bans or regulates private crypto.
Specific tax treatment of crypto gains (currently assumed to be under general income tax).
Whether SIFIU will update the Money Laundering Act to explicitly include VASPs in line with FATF standards.

Detailed Explanation

Retail cryptocurrency trading is legally allowed but entirely unregulated in the Solomon Islands. The Central Bank of Solomon Islands (CBSI) has established a clear position that private cryptocurrencies such as Bitcoin, Ethereum, and Ripple are not legal tender and are not supervised by any financial authority in the country. This stance was formally communicated in a public notice issued on 2019-11-01, where the CBSI explicitly warned investors that they engage with these assets at their own risk, as there is no regulatory framework to protect them. The legal basis for this declaration is rooted in the Central Bank of Solomon Islands Act 2012, which grants the CBSI the sole authority to issue currency, thereby excluding private digital assets from having any official monetary status. Consequently, there is no specific licensing regime for Virtual Asset Service Providers (VASPs); crypto exchanges may operate under general business registration but are not subject to financial oversight. The Solomon Islands Financial Intelligence Unit (SIFIU) maintains general Anti-Money Laundering and Counter-Financing of Terrorism (AML/CFT) oversight, but no specific guidelines have been extended to the virtual asset sector. The regulatory posture is notably defensive, driven in part by a high prevalence of crypto-themed scams such as 'Sol York' and 'OneCoin', which have heightened official caution. While banking access for crypto-related transactions is not explicitly banned by law, the CBSI's risk warnings have led to a highly restrictive environment where commercial banks are likely to refuse such business, effectively creating a significant operational barrier. The government's current digital currency focus is not on regulating private crypto markets but on developing its own state-backed digital currency. This is evidenced by the active pilot of a Central Bank Digital Currency (CBDC) named 'Bokolo Cash', which is designed to address financial inclusion and operates on the permissioned SORA blockchain (Hyperledger Iroha 2) with mandatory Know Your Customer (KYC) requirements. This initiative underscores a clear preference for a controlled, sovereign digital currency over the permissionless and unregulated nature of existing cryptocurrency assets.

Summary Points

I. Regulatory Status
* Retail cryptocurrency trading is allowed but unregulated.
* Cryptocurrencies are not legal tender and are not supervised by any financial authority.
* There is no specific legislative framework governing virtual assets.
* Investors are warned they act at their own risk.

II. Key Regulatory Bodies
* Central Bank of Solomon Islands (CBSI)
* Primary financial regulator.
* Issues public warnings on cryptocurrencies.
* Manages the Central Bank Digital Currency (CBDC) pilot ('Bokolo Cash').
* Solomon Islands Financial Intelligence Unit (SIFIU)
* Responsible for general AML/CFT oversight.
* No specific virtual asset guidelines have been issued.

III. Important Legislation
* Central Bank of Solomon Islands Act 2012 (Act No. 4 of 2012)
* Enacted: 2012-05-17.
* Establishes CBSI's sole authority to issue currency.
* Used as the legal basis to declare private cryptocurrencies are not legal tender.
* Public Notice on Cryptocurrencies (CBSI Press Statement)
* Issued: 2019-11-01.
* Explicit warning that cryptocurrencies (e.g., Bitcoin, Ethereum, Ripple) are not regulated, not legal tender, and investment is at the user's own risk.

IV. Compliance Requirements
* No specific VASP licensing regime exists.
* Crypto exchanges may operate under general business registration requirements.
* No specific AML/CFT, reporting, or capital requirements are mandated for crypto activities.
* No specific tax framework for crypto; general income and capital gains tax principles likely apply.

V. Notable Restrictions or Limitations
* Banking access for crypto-related transactions is highly restricted in practice due to CBSI risk warnings; banks may refuse service.
* The prevalence of crypto-themed scams (e.g., 'Sol York', 'OneCoin') has led to a defensive regulatory posture and public warnings.
* The government demonstrates a clear preference for state-backed digital currency over regulating private crypto markets.

VI. Recent Developments or Notes
* The government is actively piloting a Central Bank Digital Currency (CBDC) named 'Bokolo Cash' to address financial inclusion.
* The 'Bokolo Cash' project uses the permissioned SORA blockchain (Hyperledger Iroha 2) and requires KYC.
* Users should not confuse the legal status of the state-sanctioned Bokolo Cash with that of permissionless crypto assets like Bitcoin, which remain unregulated.

Full Analysis Report

The regulatory environment for cryptocurrency in the Solomon Islands is characterized by a 'hands-off' approach to private assets combined with active development of a state-backed digital currency. The Central Bank of Solomon Islands (CBSI) has consistently maintained that cryptocurrencies such as Bitcoin and Ethereum are not legal tender and are not regulated by any national law. Consequently, there is no licensing regime for Virtual Asset Service Providers (VASPs), and no specific consumer protections exist for retail traders. Activities involving crypto assets are permitted but are conducted entirely at the user's own risk.

Despite the lack of regulation, the CBSI has been vocal in issuing public warnings. A landmark statement in November 2019 clarified that the Central Bank does not endorse unregulated cryptocurrencies and warned the public of the speculative risks. This stance has been reinforced by subsequent alerts regarding fraudulent schemes, such as the 'Sol York' currency, which falsely claimed to be a new legal tender. The CBSI emphasizes that it is the sole authority permitted to issue currency in the country, leveraging the Central Bank of Solomon Islands Act 2012 to delegitimize private tokens as money.

In contrast to its passive stance on private crypto, the Solomon Islands is aggressively pursuing a Central Bank Digital Currency (CBDC). In late 2023, the CBSI launched a proof-of-concept for 'Bokolo Cash' in partnership with Japanese blockchain firm Soramitsu. This CBDC is pegged 1:1 to the Solomon Islands Dollar and is intended to function as legal tender within the pilot framework. This bifurcation—ignoring private crypto while building a state-run alternative—suggests the long-term regulatory strategy focuses on substitution rather than integration of decentralized assets.

Operational challenges for retail traders remain significant. While there is no explicit banking ban, local financial institutions are guided by CBSI's risk warnings and are unlikely to process transfers to crypto exchanges. Furthermore, the Solomon Islands Financial Intelligence Unit (SIFIU) monitors for money laundering risks under general statutes, but has not yet issued specific 'Travel Rule' guidance or registration requirements for crypto businesses, leaving the sector largely opaque and informal.

The regulatory environment for cryptocurrency in the Solomon Islands is characterized by a 'hands-off' approach to private assets combined with active development of a state-backed digital currency. The Central Bank of Solomon Islands (CBSI) has consistently maintained that cryptocurrencies such as Bitcoin and Ethereum are not legal tender and are not regulated by any national law. Consequently, there is no licensing regime for Virtual Asset Service Providers (VASPs), and no specific consumer protections exist for retail traders. Activities involving crypto assets are permitted but are conducted entirely at the user's own risk.

Despite the lack of regulation, the CBSI has been vocal in issuing public warnings. A landmark statement in November 2019 clarified that the Central Bank does not endorse unregulated cryptocurrencies and warned the public of the speculative risks. This stance has been reinforced by subsequent alerts regarding fraudulent schemes, such as the 'Sol York' currency, which falsely claimed to be a new legal tender. The CBSI emphasizes that it is the sole authority permitted to issue currency in the country, leveraging the Central Bank of Solomon Islands Act 2012 to delegitimize private tokens as money.

In contrast to its passive stance on private crypto, the Solomon Islands is aggressively pursuing a Central Bank Digital Currency (CBDC). In late 2023, the CBSI launched a proof-of-concept for 'Bokolo Cash' in partnership with Japanese blockchain firm Soramitsu. This CBDC is pegged 1:1 to the Solomon Islands Dollar and is intended to function as legal tender within the pilot framework. This bifurcation—ignoring private crypto while building a state-run alternative—suggests the long-term regulatory strategy focuses on substitution rather than integration of decentralized assets.

Operational challenges for retail traders remain significant. While there is no explicit banking ban, local financial institutions are guided by CBSI's risk warnings and are unlikely to process transfers to crypto exchanges. Furthermore, the Solomon Islands Financial Intelligence Unit (SIFIU) monitors for money laundering risks under general statutes, but has not yet issued specific 'Travel Rule' guidance or registration requirements for crypto businesses, leaving the sector largely opaque and informal.

Source Evidence

Primary and secondary sources cited in this analysis

CBSI's Position on Cryptocurrencies primary (regulator)

2019-11-01

"The Central Bank of Solomon Islands (CBSI) wishes to warn the general public that cryptocurrencies... are not currencies issued or regulated by the Central Bank... investment in such digital currencies is considered very risky."

Central Bank of Solomon Islands Collaborates with Soramitsu on CBDC PoC Project primary (official_government)

2023-11-29

"The CBSI issues the Bokolo Cash currency as a digital representation of the Solomon Dollar... accepted as legal tender within the confines of the PoC."

CBSI Warns on Fake Currency Sol York primary (news)

2021-06-14

"CBSI has the sole authority by law to issue currencies on the island under the CBSI Act 2012."

Is Crypto Legal In Solomon Islands? secondary (analysis)

2025-01-01

"As of 2025, cryptocurrency remains unregulated in the Solomon Islands... However, this lack of regulation does not equate to illegality."

Crypto Adoption Around the World: Solomon Islands secondary (analysis)

2024-12-07

"There are no specific laws governing cryptocurrency in the Solomon Islands - it exists in a legal 'grey area' where it's neither explicitly legal nor illegal."