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Maldives

Retail_Trading_Status

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Analysis ID
#80
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Archived
Created
2025-04-12 06:44
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Live

Executive Summary

Retail cryptocurrency trading in the Maldives is restricted, though not explicitly illegal for individuals to own crypto. The Maldives Monetary Authority (MMA) prohibits licensed financial institutions from engaging in crypto transactions and there is no comprehensive regulatory framework. Key requirements for intermediaries or exchanges, such as AML/KYC or licensing, are absent. The general approach is restrictive, with a focus on preventing the use of crypto within the regulated financial system.

Key Pillars

The primary regulator is the Maldives Monetary Authority (MMA), which adopts a restrictive approach towards cryptocurrencies. Core compliance requirements such as AML/CFT, KYC/CDD are not yet specifically defined or enforced for cryptocurrency activities due to the absence of a regulatory framework. There are currently no licensing or registration requirements for cryptocurrency exchanges or VASPs operating within the Maldives.

Landmark Laws

Maldives Monetary Authority Act (Law no. 6/81): This act grants the MMA the sole authority to issue the Maldivian Rufiyaa (MVR) and prohibits the issuance or use of other currencies, including virtual ones, as legal tender.

Considerations

Cryptocurrencies are not treated as 'money' or a 'financial product' within the Maldives, limiting investment protections. The MMA has issued warnings about the volatility and risks associated with cryptocurrency trading. A potential legal workaround may exist for individual Maldivians to use offshore exchanges. Ambiguity exists regarding MMA's stance towards unbacked crypto for individuals.

Notes

MMA issued warnings in 2018, 2021 and again referenced in early 2025 prohibiting use of cryptocurrencies in financial transactions. There is a disclaimer regarding ambiguity in MMA's stance on individual usage of unbacked crypto assets (late 2024). Bank of Maldives denies any involvement in cryptocurrency exchange services. The 2018 MMA Official Announcement URL is https://www.mma.gov.mv/news.php?id=531

Detailed Explanation

The status of retail cryptocurrency trading in the Maldives is classified as 'Restricted.' While owning or holding cryptocurrencies isn't explicitly illegal, the regulatory environment significantly limits their use in the formal financial system. The Maldives Monetary Authority (MMA), the central bank, maintains a cautious stance. Cryptocurrencies are not recognized as legal tender, as only the MMA can issue the Maldivian Rufiyaa (MVR) according to the Maldives Monetary Authority Act (Law no. 6/81). The MMA has stated multiple times (2018, 2021, early 2025) that no entity is permitted to conduct financial transactions using cryptocurrencies within the Maldives, prohibiting licensed institutions from facilitating crypto transactions. A specific legal or regulatory framework for cryptocurrencies or Virtual Asset Service Providers (VASPs) is absent, meaning there are no established rules for licensing, consumer protection, or AML/CFT compliance in this sector. The MMA has issued public warnings regarding the risks associated with cryptocurrencies, emphasizing volatility, illicit use potential, and lack of oversight. Official statements indicate that Maldivian law doesn't permit using cryptocurrencies for business transactions, reaffirmed in 2021 and in a 2024 US State Department report after reports of resorts potentially accepting crypto payments. Individuals might access offshore cryptocurrency exchanges, but do so unregulated and face difficulties integrating these assets with the domestic banking system. Recent MMA Deputy Governor statements (late 2024) suggest supporting individual use of unbacked cryptocurrency while developing regulations for asset-backed digital money, but also reiterate that the MMA "does not advocate for the use of unbacked cryptocurrencies" and reaffirm the prohibition on buying/selling and business transactions. Major banks like the Bank of Maldives (BML) have publicly denied offering cryptocurrency exchange services, aligning with MMA directives. In summary, while individual crypto ownership isn't explicitly illegal, the restrictions on its use in licensed financial transactions, lack of legal tender status, absence of a regulatory framework, and discouragement from the central bank create a restrictive environment.

Summary Points

**Retail Cryptocurrency Trading Status in Maldives: Regulatory Analysis**

**I. Overall Regulatory Status:**

*   **Status:** Restricted ("Gray-Zone")
*   While owning/holding crypto is not explicitly illegal, its practical use and integration into the formal financial system are significantly curtailed.

**II. Key Regulatory Bodies:**

*   **Maldives Monetary Authority (MMA):**
    *   Role: Central bank and primary financial regulator.
    *   Responsibilities:
        *   Issues the Maldivian Rufiyaa (MVR).
        *   Maintains a cautious and restrictive position towards cryptocurrencies.
        *   Issues public warnings regarding cryptocurrency risks.
        *   Developing regulations for *asset-backed* digital money.
*   **Bank of Maldives (BML):**
    *   Role: Major commercial bank.
    *   Responsibilities:
        *   Complies with MMA directives.
        *   Does not offer cryptocurrency exchange services or facilitate crypto transactions.

**III. Important Legislation and Regulations:**

*   **Maldives Monetary Authority Act (Law no. 6/81):**
    *   Prohibits the issuance or use of currencies other than the MVR as legal tender, including virtual currencies.
*   **Act Regulating Domestic and International Money Remittance Trading and Money Exchange Trading:**
    *   Prohibits the use of cryptocurrencies or similar virtual currencies for transactions.
*   **Absence of Specific Crypto Regulations:**
    *   No specific legal or regulatory framework governs cryptocurrencies, digital asset exchanges, or VASPs.
    *   Lack of established rules for licensing, consumer protection, AML/CFT compliance, or investor safeguards.

**IV. Requirements for Compliance:**

*   **Compliance with MMA Directives:**
    *   Financial institutions must adhere to MMA's restrictions on cryptocurrency transactions.
*   **AML/CFT Compliance (General):**
    *   While no specific crypto AML/CFT rules exist, general AML/CFT regulations apply to financial institutions.

**V. Notable Restrictions and Limitations:**

*   **No Legal Tender Status:** Cryptocurrencies are not recognized as legal tender.
*   **Prohibition on Licensed Transactions:** Licensed financial institutions (banks, money service businesses) are prohibited from facilitating cryptocurrency trades or transactions.
*   **Restriction on Business Use:** Maldivian law does not permit the use of cryptocurrencies for valid business transactions.
*   **Lack of Regulatory Oversight:** No local investor protection mechanisms or regulatory oversight for cryptocurrency activities.
*   **Difficulties with Domestic Banking:** Prohibitions on licensed institutions make it difficult to integrate crypto assets with the domestic banking system.

**VI. Recent Developments and Changes:**

*   **MMA Deputy Governor Statements (Late 2024):**
    *   Some ambiguity introduced: MMA "supports the use of unbacked cryptocurrency by individuals" while developing regulations for *asset-backed* digital money.
    *   Contradictory statements: MMA "does not advocate for the use of unbacked cryptocurrencies" due to stability concerns and reaffirms the prohibition on buying/selling and business transactions.
*   **Continued Warnings:** MMA continues to issue public warnings about the risks associated with cryptocurrency trading.
*   **Reaffirmation of Restrictions:** MMA continues to reaffirm the prohibition on cryptocurrency use in licensed financial transactions and for business purposes.

Full Analysis Report

Financial Regulatory Analyst Report: Maldives

Topic: Retail_Trading_Status (Cryptocurrency)

1. Current Status: Gray-Zone

2. Detailed Narrative Explanation:

The status of retail cryptocurrency trading for individual citizens and residents in the Maldives is best described as Restricted. While there isn't an explicit, outright ban preventing individuals from owning or holding cryptocurrencies, the regulatory environment and official stance significantly curtail their practical use and integration into the formal financial system.

The Maldives Monetary Authority (MMA), the country's central bank and primary financial regulator, has consistently maintained a cautious and restrictive position towards cryptocurrencies. Key points defining this status include:

  • No Legal Tender Status: Cryptocurrencies are not recognized as legal tender in the Maldives. The MMA is the sole authority permitted to issue the Maldivian Rufiyaa (MVR), and the issuance or use of other currencies, including virtual ones, as legal tender is prohibited under the Maldives Monetary Authority Act (Law no. 6/81).
  • Prohibition on Licensed Transactions: The MMA has explicitly stated on multiple occasions (including in 2018, 2021, and referenced again in early 2025) that no entity has been granted permission to conduct financial transactions using cryptocurrencies or other virtual currencies within the Maldives. This effectively prohibits banks, money service businesses, and other licensed financial institutions from facilitating cryptocurrency trades or transactions.
  • Lack of Regulatory Framework: There is currently no specific legal or regulatory framework in the Maldives designed to govern cryptocurrencies, digital asset exchanges, or related service providers (Virtual Asset Service Providers - VASPs). This absence means there are no established rules for licensing, consumer protection, Anti-Money Laundering/Counter-Financing of Terrorism (AML/CFT) compliance specific to crypto assets, or investor safeguards within this sector.
  • Official Warnings: The MMA has issued public warnings advising caution regarding cryptocurrency trading and use, highlighting risks associated with volatility, potential for illicit use, and lack of regulatory oversight. These warnings often accompany reminders that no permissions have been granted for crypto-related financial services.
  • Restriction on Business Use: Official statements indicate that Maldivian law does not permit the use of cryptocurrencies for valid business transactions. This was reaffirmed by the MMA in 2021 following reports of resorts potentially accepting crypto payments, and reiterated in a 2024 US State Department report.
  • Individual Activity: Despite the restrictions on formal transactions and business use, individuals may still technically be able to access offshore cryptocurrency exchanges to buy, sell, and hold crypto assets. However, they do so in an unregulated environment, without local investor protection mechanisms, and face difficulties integrating these assets with the domestic banking system due to the prohibitions on licensed institutions. Recent (late 2024) statements from the MMA Deputy Governor have introduced some nuance, suggesting the MMA "supports the use of unbacked cryptocurrency by individuals" while simultaneously developing regulations for asset-backed digital money and acknowledging banks won't accept unbacked crypto. However, other reports from the same period reiterate the MMA "does not advocate for the use of unbacked cryptocurrencies" due to stability concerns and reaffirm the prohibition on buying/selling and business transactions. This ambiguity highlights the evolving landscape but doesn't override the existing, legally enforced restrictions on transactions within the regulated financial system.
  • Bank Stance: Major banks like the Bank of Maldives (BML) have publicly denied offering any cryptocurrency exchange services or facilitating crypto transactions, aligning with the MMA's directives and clarifying that crypto is not treated as 'money' or a 'financial product' in the Maldives.

In summary, while not explicitly illegal for an individual to simply own crypto, the prohibition on its use in licensed financial transactions, the lack of legal tender status, the absence of a regulatory framework, and active discouragement from the central bank create a highly restrictive environment for retail cryptocurrency trading and usage in the Maldives.

3. Relevant Excerpts from Sources:

  • (2021-03-04) MMA Statement (via CCN.com): "…no party has been granted permission to conduct any financial transactions using cryptocurrencies or other virtual currencies in the Maldives. Furthermore, the issuance of any legal tender by any other party is against the law."
  • (2018-10-11) MMA Official Announcement: "The MMA brings to the attention of the public that no party has been granted permission to conduct any financial transactions using crypto currencies or other virtual currencies in the Maldives. Furthermore, the issuance of any legal tender by any other party is against the law. Accordingly, the MMA cautions the general public on the use of crypto currency and other virtual currencies."
  • (2024-12-06) UPay Blog Analysis: "As of now, the Maldives does not have a formal regulatory framework governing cryptocurrency use. While the government has issued several warnings regarding the potential risks of unregulated digital currencies, it has yet to enact any laws or policies specifically addressing the use or legality of cryptocurrency." It also notes: "Cryptocurrencies are not yet legally regulated, which limits their use in formal transactions."
  • (2021-10-10) Edition.mv Report: "Maldives Monetary Authority (MMA) said that the Maldivian law does not allow for cryptocurrencies to be used for valid business transactions in the nation." It adds, "MMA has previously announced in 2018 as well that buying and selling of cryptocurrencies is prohibited in Maldives."
  • (2025-01-09) BML Statement (via Atoll Times): "The Central Bank of the Maldives (MMA) has made it clear that the use of cryptocurrencies or similar virtual currencies for transactions is prohibited under the Act Regulating Domestic and International Money Remittance Trading and Money Exchange Trading in the country. As per the law, only the MMA is authorized to issue Maldivian currency... making it illegal for anyone else to engage in currency issuance or trading activities related to virtual currencies."
  • (2024) US State Department Investment Climate Statement: "Since 2021, when an international resort management company said it would accept cryptocurrencies as payment for their services, the Maldives has not permitted cryptocurrencies for valid business transactions."
  • (2024-10-19) PSM News Report on MMA Deputy Governor Statement: "...the MMA supports the use of unbacked cryptocurrency by individuals. Cryptocurrency is a digital currency that operates independently. It is not widely accepted by many banks globally due to its lack of backing by tangible assets or currencies issued by central banks." (Note: This statement introduces ambiguity when contrasted with other official prohibitions on transactions).
  • (2024-10-20) Maldives Republic Report on MMA Deputy Governor Statement: "Deputy Governor Ahmed Imad stated that the Maldives Central Bank does not advocate for the use of unbacked cryptocurrencies... In 2021, the Central Bank reaffirmed that Maldivian law prohibits the use of cryptocurrencies for legitimate business transactions... The MMA had previously issued a similar reminder in 2018, making it clear that buying and selling cryptocurrencies are also prohibited within the country." (This report provides a contrasting perspective from the same period as the PSM News report).
  • (Date Unspecified) Bank of Maldives Website - Investment Fraud Section: "However in Maldives, cryptocurrency is not treated as 'money' or a 'financial product' and you have less protection if you invest and it turns out be a scam or you lose a lot of money."

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