Tanzania
Retail_Trading_Status
- Analysis ID
- #802
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- 2025-12-12 05:18
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- cbb14c6b...
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Executive Summary
Retail cryptocurrency trading in Tanzania exists in a complex regulatory gray zone characterized by conflicting signals between the judiciary, tax authorities, and the central bank. While the Bank of Tanzania (BoT) has historically issued public notices prohibiting financial institutions from facilitating crypto transactions and labeling the activity as unauthorized, a landmark High Court ruling in December 2024 declared that crypto trading is not illegal because it is subject to taxation. The Finance Act 2024 formally introduced a 3% withholding tax on digital asset transfers, effectively recognizing the sector for revenue purposes despite the absence of a formal licensing regime for Virtual Asset Service Providers (VASPs).
Key Pillars
Bank of Tanzania (BoT): Primary financial regulator; historically issued bans on banks processing crypto (2019) and maintains that the shilling is the sole legal tender.
Tanzania Revenue Authority (TRA): Enforces the Finance Act 2024, requiring digital asset platforms to withhold 3% tax on payments to residents.
High Court of Tanzania: Issued a pivotal judgment (Yellow Card v. Nyamwero) affirming the legality of crypto contracts based on their taxability.
Capital Markets and Securities Authority (CMSA): Potential future regulator for crypto assets, though no specific framework is currently active.
Landmark Laws
Finance Act, 2024 (Act No. 6 of 2024) - Enacted: 2024-07-01
- Amended the Income Tax Act to introduce a 3% withholding tax on payments made by digital asset exchange platforms to resident persons. It defines 'digital assets' broadly to include cryptocurrencies and requires non-resident platforms to register under a Simplified Tax Regime.
- Source
High Court Judgment (Commercial Case No. 12171 of 2024) (Yellow Card Tanzania Limited v. Nyamwero Michael Nyamwero) - Enacted: 2024-12-13
- A landmark ruling where the High Court rejected the argument that crypto contracts are void due to illegality. The court reasoned that since the Finance Act 2024 imposes taxes on digital assets, the activity is legally recognized and not inherently unlawful.
Public Notice on Cryptocurrencies (BoT Public Notice) - Enacted: 2019-11-12
- A circular from the Bank of Tanzania warning the public that cryptocurrencies are not legal tender and prohibiting financial institutions from facilitating crypto transactions. This notice remains the primary source of the 'banking ban' despite recent legal developments.
- Source
Considerations
Taxation vs. Regulation: The government taxes crypto (3% WHT) without regulating the conduct of exchanges (no consumer protection or AML licensing yet), creating a 'taxed but unregulated' environment.
Banking Restrictions: Despite the court ruling, the 2019 BoT circular preventing banks from processing crypto transactions has not been explicitly rescinded, forcing traders to use P2P methods or mobile money agents.
Legal Tender Status: The Tanzanian Shilling remains the sole legal tender; using crypto for direct payments of goods and services is technically prohibited under the Bank of Tanzania Act.
Non-Citizen Restrictions: The Business Licensing Order 2025 prohibits non-citizens from engaging in 'mobile money transfer services,' which could impact foreign agents operating crypto-to-cash ramps.
Notes
The 'Gray-Zone' classification is driven by the conflict between the 2019 Central Bank ban on banking support and the 2024 Tax Law/Court ruling that legitimizes the asset class. While trading is legally safer than before, the lack of a licensing regime and banking access keeps it out of the 'Allowed-Regulated' tier.
Remaining Uncertainties
- Will the Bank of Tanzania issue a new circular explicitly revoking the 2019 banking ban in light of the High Court ruling?
- When will a formal VASP licensing framework be introduced to complement the tax regime?
- How actively is the 3% withholding tax being enforced on non-resident P2P platforms?
Detailed Explanation
Detailed Explanation
Cryptocurrency trading in Tanzania exists in a regulatory gray zone, characterized by conflicting directives from major institutions. The Bank of Tanzania (BoT) has historically maintained a prohibitive stance, issuing a public notice in 2019 that warns the public cryptocurrencies are not legal tender and prohibits financial institutions from facilitating crypto transactions. This banking ban creates a significant operational hurdle. However, this position has been challenged by other state organs. The Finance Act of 2024, which came into effect on July 1, 2024, amended the Income Tax Act to introduce a 3% withholding tax on payments made by digital asset exchange platforms to resident persons. This act of taxation implicitly acknowledges the existence of the sector. This recognition was further solidified by a landmark High Court ruling on December 13, 2024 (Commercial Case No. 12171 of 2024, Yellow Card Tanzania Limited v. Nyamwero Michael Nyamwero), which declared that cryptocurrency trading is not illegal. The court's reasoning was that since the Finance Act 2024 imposes taxes on digital assets, the activity cannot be considered unlawful. This creates a paradox where the activity is deemed legal and taxable by the judiciary and the Tanzania Revenue Authority (TRA), yet remains practically constrained by the central bank's prohibition on banking access. The regulatory framework is therefore incomplete; there is no formal licensing regime for Virtual Asset Service Providers (VASPs) overseen by a body like the Capital Markets and Securities Authority (CMSA), leaving the market without consumer protection or anti-money laundering rules specific to crypto. The environment is best described as 'taxed but unregulated,' with the government seeking revenue without establishing a formal regulatory structure. Furthermore, the Business Licensing Order 2025 prohibits non-citizens from engaging in 'mobile money transfer services,' which could impact foreign-operated crypto-to-cash ramps, and the Bank of Tanzania Act reaffirms that the Tanzanian Shilling is the sole legal tender, technically prohibiting the direct use of crypto for payments.
Summary Points
I. Regulatory Status
* Gray-Zone: The regulatory environment is defined by conflicting signals from different government bodies. Trading is not formally legalized or regulated but has been deemed legal and subject to taxation by the High Court.
II. Key Regulatory Bodies
* Bank of Tanzania (BoT): The central bank maintains that cryptocurrencies are not legal tender and has prohibited financial institutions from processing crypto transactions via a 2019 public notice.
* Tanzania Revenue Authority (TRA): Enforces the 3% withholding tax on digital asset payments as introduced by the Finance Act 2024.
* High Court of Tanzania: Issued a pivotal judgment in December 2024 affirming the legality of crypto contracts based on their taxability.
* Capital Markets and Securities Authority (CMSA): A potential future regulator for crypto assets, but no specific framework is currently active.
III. Important Legislation
* Finance Act, 2024 (Act No. 6 of 2024): Enacted on July 1, 2024, this law amended the Income Tax Act to introduce a 3% withholding tax on payments made by digital asset exchange platforms to residents. It broadly defines 'digital assets' to include cryptocurrencies and requires non-resident platforms to register under a Simplified Tax Regime.
* High Court Judgment (Commercial Case No. 12171 of 2024): Ruled on December 13, 2024, that cryptocurrency trading is not illegal because the Finance Act 2024 imposes taxes on it, thereby providing a degree of legal legitimacy.
* Public Notice on Cryptocurrencies (BoT Public Notice): Issued on November 12, 2019, this circular warns the public that cryptocurrencies are not legal tender and prohibits financial institutions from facilitating crypto transactions, creating a de facto banking ban.
IV. Compliance Requirements
* Taxation: Digital asset exchange platforms are required to withhold a 3% tax on payments made to resident persons.
V. Notable Restrictions or Limitations
* Banking Ban: Financial institutions are prohibited from facilitating cryptocurrency transactions due to the BoT's 2019 notice, forcing traders to rely on peer-to-peer (P2P) methods or mobile money agents.
* Legal Tender: The Tanzanian Shilling is the sole legal tender; using cryptocurrency for direct payments for goods and services is technically prohibited.
* Non-Citizen Restrictions: The Business Licensing Order 2025 prohibits non-citizens from engaging in 'mobile money transfer services,' which could impact foreign agents operating crypto-to-cash ramps.
VI. Recent Developments or Notes
* The conflict between the 2019 BoT banking ban and the 2024 tax law and court ruling is the primary driver of the 'Gray-Zone' classification.
* The market operates in a 'taxed but unregulated' environment, meaning the government collects revenue without providing a formal licensing regime or consumer protection framework.
Full Analysis Report
Full Analysis Report
The regulatory status of cryptocurrency in Tanzania is currently defined by a significant tug-of-war between the judicial/fiscal branches of government and the central bank's conservative monetary policy. For years, the Bank of Tanzania (BoT) maintained a strict stance, issuing a public notice in November 2019 that effectively banned banks from dealing with crypto assets and warned the public that such activities were unauthorized. This created a hostile environment where trading continued largely underground or via peer-to-peer (P2P) networks to bypass banking restrictions.
However, the landscape shifted dramatically in the latter half of 2024. The enactment of the Finance Act 2024 on July 1, 2024, introduced a specific 3% withholding tax on income derived from digital asset transfers. This move by the Tanzania Revenue Authority (TRA) signaled a de facto recognition of the asset class, prioritizing revenue collection over the central bank's prohibition. Non-resident platforms are now technically required to register under a Simplified Tax Regime to remit these taxes, creating a paradox where an entity is tax-registered but not financially licensed.
This contradiction was addressed in the landmark High Court judgment delivered on December 13, 2024, in the case of Yellow Card Tanzania Limited v. Nyamwero Michael Nyamwero. The defendant attempted to void a settlement agreement involving cryptocurrency by citing the BoT's 2019 ban. The Court dismissed this argument, ruling that because the government collects tax on these assets under the Finance Act 2024, the underlying activity cannot be deemed 'illegal.' This judgment effectively legalized the enforceability of crypto contracts, even if the BoT has not yet issued a regulatory framework for exchanges.
Despite these advancements, the status remains 'Gray-Zone' rather than 'Allowed-Regulated' because there is still no licensing regime for Virtual Asset Service Providers (VASPs). The BoT has not issued licenses to exchanges, and the 2019 circular prohibiting direct banking integration remains technically in force, meaning banks are hesitant to open accounts for crypto businesses. Traders thus operate in a legal environment where their profits are taxed and their contracts are enforceable in court, but their access to the formal banking system is restricted.
The regulatory status of cryptocurrency in Tanzania is currently defined by a significant tug-of-war between the judicial/fiscal branches of government and the central bank's conservative monetary policy. For years, the Bank of Tanzania (BoT) maintained a strict stance, issuing a public notice in November 2019 that effectively banned banks from dealing with crypto assets and warned the public that such activities were unauthorized. This created a hostile environment where trading continued largely underground or via peer-to-peer (P2P) networks to bypass banking restrictions. However, the landscape shifted dramatically in the latter half of 2024. The enactment of the Finance Act 2024 on July 1, 2024, introduced a specific 3% withholding tax on income derived from digital asset transfers. This move by the Tanzania Revenue Authority (TRA) signaled a de facto recognition of the asset class, prioritizing revenue collection over the central bank's prohibition. Non-resident platforms are now technically required to register under a Simplified Tax Regime to remit these taxes, creating a paradox where an entity is tax-registered but not financially licensed. This contradiction was addressed in the landmark High Court judgment delivered on December 13, 2024, in the case of *Yellow Card Tanzania Limited v. Nyamwero Michael Nyamwero*. The defendant attempted to void a settlement agreement involving cryptocurrency by citing the BoT's 2019 ban. The Court dismissed this argument, ruling that because the government collects tax on these assets under the Finance Act 2024, the underlying activity cannot be deemed 'illegal.' This judgment effectively legalized the enforceability of crypto contracts, even if the BoT has not yet issued a regulatory framework for exchanges. Despite these advancements, the status remains 'Gray-Zone' rather than 'Allowed-Regulated' because there is still no licensing regime for Virtual Asset Service Providers (VASPs). The BoT has not issued licenses to exchanges, and the 2019 circular prohibiting direct banking integration remains technically in force, meaning banks are hesitant to open accounts for crypto businesses. Traders thus operate in a legal environment where their profits are taxed and their contracts are enforceable in court, but their access to the formal banking system is restricted.
Source Evidence
Primary and secondary sources cited in this analysis
"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."
"Payments made by residents or non-residents to residents for the exchange or transfer of digital assets are subject to WHT at the rate of 3%."
"The Court ruled since the parties who are involved in digital money and digital assets have been paying tax under the tax laws, their transaction cannot be declared illegal."
"A recent decision delivered by the High Court of Tanzania on 13 December 2024... has sparked and refuelled discussion concerning the legality of the use of virtual assets."
"Withholding tax (WHT) on Digital Assets: Payments made by residents or non-residents to residents for the exchange or transfer of digital assets are subject to WHT at the rate of 3%."
Web Sources (6)
Sources discovered via web search grounding
Search queries used (10)
- Is cryptocurrency trading legal in Tanzania 2025
- Tanzania Finance Act 2024 cryptocurrency tax
- Bank of Tanzania public notice on virtual assets
- Tanzania cryptocurrency regulation status 2024 2025
- Bank of Tanzania cryptocurrency circular 2024
- Tanzania Finance Act 2024 digital asset tax section 3%
- High Court of Tanzania Yellow Card vs Nyamwero judgment summary
- Bank of Tanzania reaction to Finance Act 2024 crypto tax
- Are Tanzanian banks allowed to process crypto transactions 2025
- Yellow Card Tanzania legal status 2025
https://finandlaw.co.tz/2024/07/01/the-finance-act-2024-the-fiscal-legislative-changes-on-doing-business-in-tanzania/
https://www.ey.com/en_gl/technical/tax-alerts/tanzanian-finance-act-2024-makes-changes-affecting-businesses-and-individuals
https://www.tra.go.tz/page/digital-service-tax
https://www.afriwise.com/blog/tanzania-courts-decision-on-virtual-assets
https://www.pwc.co.tz/press-room/navigating-uncharted-territory.html
https://aln.africa/wp-content/uploads/2025/03/The-Yellow-Card-Precedent-A-Catalyst-for-Tanzanias-Cryptocurrency-Regulatory-Framework-ALN-Tanzania-Tanzania-Legal-Insight.pdf