Zambia
Retail_Trading_Status
Status Changed
Previous status: Allowed-UnRegulated
Regulatory sandbox implementation and draft payment restrictions create sufficient uncertainty to trigger Gray-Zone status under exclusion criteria for Allowed-UnRegulated
- Analysis ID
- #831
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- 2025-12-12 05:25
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Executive Summary
Retail cryptocurrency trading in Zambia is currently in a regulatory gray zone. While the possession and trading of digital assets are not explicitly criminalized, there is no permanent licensing framework for Virtual Asset Service Providers (VASPs), and the Bank of Zambia (BoZ) has repeatedly stated that crypto is not legal tender. The government, through the Securities and Exchange Commission (SEC) and BoZ, conducted regulatory 'testing' and simulations in 2023 to develop a framework, but no final legislation has been enacted as of late 2024. Exchanges like Yellow Card operate by registering with the Financial Intelligence Centre (FIC) for AML purposes, but they lack a specific crypto-asset license.
Key Pillars
Bank of Zambia (BoZ): Primary regulator for monetary policy; maintains that crypto is not legal tender and warns users they operate at 'owner's risk'.
Securities and Exchange Commission (SEC): Oversees capital markets and investor protection; currently managing a regulatory sandbox and testing phase for digital assets.
Financial Intelligence Centre (FIC): Enforces Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) rules; entities like Yellow Card register here as reporting institutions.
Ministry of Technology and Science: actively pushing for a regulatory framework to balance innovation with citizen safety.
Landmark Laws
Bank of Zambia Act (Section 30) (Chapter 360 of the Laws of Zambia) - Enacted: 1996-01-01
- Vests the exclusive right to issue notes and coins in the Bank of Zambia. Cited by BoZ to affirm that cryptocurrencies are not legal tender.
- Source
Securities Act, No. 41 of 2016 (Act No. 41 of 2016) - Enacted: 2016-01-01
- Governs securities in Zambia. The SEC uses this act to warn against unlicensed investment advice and ICOs (e.g., Onyxcoin case).
- Source
Bank of Zambia Currency Regulations (Draft) (Draft Regulations 2024)
- Proposed regulations announced in June 2024 aimed at enforcing the Kwacha as the sole legal tender for domestic transactions, potentially restricting crypto payments.
Financial Intelligence Centre Act (Act No. 46 of 2010) - Enacted: 2010-01-01
- Requires reporting entities to register with the FIC and report suspicious transactions. Crypto exchanges use this for basic compliance legitimacy.
- Source
Considerations
No specific crypto tax legislation exists; generic Income Tax and Capital Gains rules apply.
Banking access is not explicitly banned but is cautious; some exchanges use mobile money (Airtel/MTN) as a primary fiat ramp.
The SEC Sandbox guidelines initially excluded cryptocurrency, but the Minister of Technology later announced specific 'testing' for crypto regulation in 2023.
Using crypto for payments (buying goods) is effectively prohibited under legal tender laws and the proposed 2024 currency regulations.
Notes
Zambia is a classic example of a 'testing' jurisdiction. The government is pro-innovation (hosting Vitalik Buterin, announcing hubs) but the actual laws lag behind. The contradiction between the SEC's written sandbox exclusion and the Minister's verbal confirmation of testing suggests a policy shift that hasn't yet been codified in public guidelines.
Remaining Uncertainties
- The outcome of the regulatory tests concluded in June 2023 has not been published.
- Whether the proposed Bank of Zambia Currency Regulations 2024 will explicitly mention and ban crypto payments.
- The specific timeline for the enactment of a VASP licensing framework.
Detailed Explanation
Detailed Explanation
Retail cryptocurrency trading in Zambia exists in a regulatory gray zone as of late 2024. While not explicitly criminalized, there is no permanent licensing framework for Virtual Asset Service Providers (VASPs). The Bank of Zambia (BoZ), citing the Bank of Zambia Act (1996), consistently states that cryptocurrencies are not legal tender and that users operate at their own risk. The Securities and Exchange Commission (SEC), using the Securities Act of 2016, warns against unlicensed investment schemes and initial coin offerings. However, the government is actively exploring a formal framework. In 2023, the SEC and BoZ conducted regulatory 'testing' and simulations for digital assets, a policy shift from earlier sandbox guidelines that excluded crypto, as announced by the Ministry of Technology and Science. The primary compliance anchor for operating crypto exchanges is registration with the Financial Intelligence Centre (FIC) under the Financial Intelligence Centre Act of 2010, which mandates Anti-Money Laundering and Counter-Terrorism Financing reporting. This provides a basic level of legitimacy, as seen with exchanges like Yellow Card, but does not constitute a specific crypto-asset license.
The regulatory landscape is characterized by cautious progression and notable restrictions. There is no specific cryptocurrency tax legislation; generic Income Tax and Capital Gains rules apply. Banking access for crypto businesses is not formally banned but is approached with caution, leading many exchanges to rely on mobile money networks for fiat on-ramps. Crucially, using cryptocurrency for payments is effectively prohibited. The BoZ's legal tender monopoly, reinforced by draft Bank of Zambia Currency Regulations announced in June 2024, aims to enforce the Kwacha as the sole legal tender for domestic transactions, directly restricting crypto payments. Therefore, while the government demonstrates a pro-innovation stance through high-level engagements and testing phases, the actual laws lag behind, creating a contradictory environment where activity is tolerated but lacks comprehensive legal protection and faces significant limitations in utility, particularly for payments.
Summary Points
I. Regulatory Status
* Status: Gray-Zone.
* Retail trading is not explicitly criminalized but operates without a permanent licensing framework.
* The government is in a 'testing' phase (2023-2024) to develop a regulatory framework.
* No final, enacted cryptocurrency-specific legislation exists as of late 2024.
II. Key Regulatory Bodies
* Bank of Zambia (BoZ):
* Primary monetary authority; asserts crypto is not legal tender.
* Warns users they operate at 'owner's risk'.
* Participated in 2023 regulatory testing.
* Securities and Exchange Commission (SEC):
* Oversees capital markets and investor protection.
* Manages the regulatory sandbox and led the 2023 testing phase for digital assets.
* Issues warnings on unlicensed investment schemes and ICOs.
* Financial Intelligence Centre (FIC):
* Enforces AML/CTF rules.
* Crypto exchanges (e.g., Yellow Card) register here as reporting institutions for basic compliance legitimacy.
* Ministry of Technology and Science:
* Actively advocates for a regulatory framework to balance innovation and safety.
III. Important Legislation
* Bank of Zambia Act (1996):
* Section 30 vests exclusive right to issue currency in the BoZ.
* Cited to affirm cryptocurrencies are not legal tender.
* Securities Act, No. 41 of 2016:
* Governs securities; used by SEC to warn against unlicensed investment advice and ICOs.
* Financial Intelligence Centre Act (2010):
* Mandates registration and suspicious transaction reporting for designated entities.
* Primary law under which crypto exchanges currently achieve operational compliance.
* Bank of Zambia Currency Regulations (Draft, 2024):
* Proposed regulations to enforce the Kwacha as sole legal tender for domestic transactions.
* Would explicitly restrict the use of crypto for payments.
IV. Compliance Requirements
* For Virtual Asset Service Providers (VASPs):
* Mandatory registration with the Financial Intelligence Centre (FIC) as a reporting institution for AML/CTF purposes.
* No specific crypto-asset license is available.
* For Users/Investors:
* Generic Income Tax and Capital Gains Tax rules apply; no specific crypto tax legislation exists.
V. Notable Restrictions or Limitations
* Payments: Using cryptocurrency for payments (buying goods/services) is effectively prohibited under legal tender laws and the proposed 2024 currency regulations.
* Banking Access: Not explicitly banned but treated with caution by traditional banks, leading exchanges to primarily use mobile money (Airtel/MTN) as a fiat on-ramp.
* Legal Status: Cryptocurrencies are not recognized as legal tender by the Bank of Zambia.
* Licensing: No permanent licensing regime exists for crypto exchanges, leaving them in a provisional state.
VI. Recent Developments or Notes
* The SEC and BoZ conducted a regulatory 'testing' and simulation phase for digital assets in 2023.
* This represented a shift from earlier SEC sandbox guidelines which had excluded cryptocurrency.
* The government exhibits a pro-innovation stance (e.g., hosting industry figures) but formal law-making is slow.
* The contradiction between earlier sandbox exclusions and later ministerial announcements highlights a policy evolution not yet fully codified.
Full Analysis Report
Full Analysis Report
Zambia's regulatory status for retail cryptocurrency trading falls into the 'Gray-Zone' classification due to the absence of a permanent licensing regime despite active government testing. The Bank of Zambia (BoZ) has maintained a consistent stance since 2018 that cryptocurrencies are not legal tender. In various press statements, including a reiteration in 2023, the BoZ emphasized that it does not supervise or regulate the crypto landscape, and any engagement is at the 'owner's risk.' This lack of oversight means that while trading is not a criminal offense, consumers have no regulatory recourse in the event of fraud or exchange failure.
The Securities and Exchange Commission (SEC) has taken a proactive but cautious role. While its initial Regulatory Sandbox guidelines explicitly excluded 'innovations that have features such as those of cryptocurrency,' the Ministry of Technology and Science announced in early 2023 that the SEC and BoZ were conducting technology simulations to understand and eventually regulate the sector. These tests were scheduled to conclude in June 2023. However, as of late 2024, no formal 'Virtual Asset Service Provider' (VASP) law has been enacted, leaving the market in a transitional state where regulation is anticipated but not yet in force.
Operationally, this environment allows major African exchanges like Yellow Card to offer services to Zambian residents. These entities legitimize their operations by registering with the Financial Intelligence Centre (FIC) as reporting entities for Anti-Money Laundering (AML) purposes. This registration does not constitute a license to operate a crypto exchange but fulfills basic financial crime reporting obligations. Fiat on-ramps and off-ramps are largely facilitated through mobile money networks (Airtel Money, MTN Mobile Money) rather than direct bank integrations, reflecting the banking sector's cautious approach to unregulated assets.
A significant recent development is the draft 'Bank of Zambia Currency Regulations, 2024,' announced in June 2024. These proposed rules aim to strictly enforce the Zambian Kwacha as the sole legal tender for all domestic transactions. If strictly applied, this would make the use of cryptocurrency for payments (goods and services) explicitly illegal, confining crypto activity strictly to investment and trading asset classes. Until the testing phase converts into passed legislation, Zambia remains a jurisdiction of 'tolerance without legalization,' fitting the Gray-Zone criteria.
Zambia's regulatory status for retail cryptocurrency trading falls into the 'Gray-Zone' classification due to the absence of a permanent licensing regime despite active government testing. The Bank of Zambia (BoZ) has maintained a consistent stance since 2018 that cryptocurrencies are not legal tender. In various press statements, including a reiteration in 2023, the BoZ emphasized that it does not supervise or regulate the crypto landscape, and any engagement is at the 'owner's risk.' This lack of oversight means that while trading is not a criminal offense, consumers have no regulatory recourse in the event of fraud or exchange failure. The Securities and Exchange Commission (SEC) has taken a proactive but cautious role. While its initial Regulatory Sandbox guidelines explicitly excluded 'innovations that have features such as those of cryptocurrency,' the Ministry of Technology and Science announced in early 2023 that the SEC and BoZ were conducting technology simulations to understand and eventually regulate the sector. These tests were scheduled to conclude in June 2023. However, as of late 2024, no formal 'Virtual Asset Service Provider' (VASP) law has been enacted, leaving the market in a transitional state where regulation is anticipated but not yet in force. Operationally, this environment allows major African exchanges like Yellow Card to offer services to Zambian residents. These entities legitimize their operations by registering with the Financial Intelligence Centre (FIC) as reporting entities for Anti-Money Laundering (AML) purposes. This registration does not constitute a license to operate a crypto exchange but fulfills basic financial crime reporting obligations. Fiat on-ramps and off-ramps are largely facilitated through mobile money networks (Airtel Money, MTN Mobile Money) rather than direct bank integrations, reflecting the banking sector's cautious approach to unregulated assets. A significant recent development is the draft 'Bank of Zambia Currency Regulations, 2024,' announced in June 2024. These proposed rules aim to strictly enforce the Zambian Kwacha as the sole legal tender for all domestic transactions. If strictly applied, this would make the use of cryptocurrency for payments (goods and services) explicitly illegal, confining crypto activity strictly to investment and trading asset classes. Until the testing phase converts into passed legislation, Zambia remains a jurisdiction of 'tolerance without legalization,' fitting the Gray-Zone criteria.
Source Evidence
Primary and secondary sources cited in this analysis
"BoZ does not oversee, supervise nor regulate the cryptocurrency landscape. Consequently, any and all activities related to the buying, trading or usage of cryptocurrencies are performed at owner's risk."
"The Sandbox shall not admit innovations that have features such as those of cryptocurrency but shall promote the use of internationally accepted new technology such as blockchain."
"The SEC kindly advises the public to be cautious before placing valued funds with anybody soliciting funds for investment in a scheme... unauthorized or unlicensed entities... places your investment at great risk."
"The Regulations will also seek to restrict domestic transactions to be conducted exclusively in Zambian kwacha... re-enforce the role of the Kwacha as the sole legal tender."
"Zambia is all set to end testing for crypto regulations by June 2023... The central bank is simulating that to see what would happen in the real world."
"Yellow Card Services Zambia Limited... is registered for financial crime reporting purposes with the Financial Intelligence Centre (FIC)."
Web Sources (14)
Sources discovered via web search grounding
Search queries used (11)
- Zambia crypto retail trading legality
- Securities and Exchange Commission Zambia cryptocurrency guidelines
- Bank of Zambia statement on cryptocurrencies 2023 2024
- Zambia SEC sandbox cryptocurrency testing
- Bank of Zambia cryptocurrency regulation status 2024 2025
- Is Yellow Card licensed in Zambia
- Zambia Revenue Authority cryptocurrency tax guidance
- Felix Mutati Zambia crypto regulation progress report
- Zambia SEC sandbox cryptocurrency rules update
- Zambia cryptocurrency regulation update late 2024 2025
- Bank of Zambia directive prohibiting banks from crypto transactions
https://coingeek.com/zambia-digital-asset-regulation-tests-to-end-in-june/
https://coingeek.com/zambias-central-bank-confirms-stance-cryptos-theyre-not-legal-tender/
https://www.boz.zm/PRESS-RELEASE-ON-CRYPTOCURRENCIES.pdf
https://www.lusakatimes.com/2018/10/16/central-bank-lacks-legal-backing-to-completely-ban-cryptocurrency/
https://cryptonomadhub.io/countries/zm
https://freemanlaw.com/cryptocurrency/zambia/
https://www.devere-zambia.co.zm/news/Zambia-plans-to-end-crypto-regulation-tests-by-June?utm_content=245465434&utm_medium=social&utm_source=linkedin&hss_channel=lcp-850143
https://blog.mexc.com/wiki/are-there-any-taxes-for-crypto-in-zambia/
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http://techhub.liveblog365.com/2023/04/13/report-zambia-aiming-to-finalize-crypto-regulation-testing-by-june/
https://corpus.co.zm/wp-content/uploads/2024/08/Legal-Alert-Reflections-on-the-Anticipated-Bank-of-Zambia-Currency-Regulations-2024.pdf
https://blog.millionero.com/news/zambia-aims-to-get-done-with-testing-for-crypto-regulations-in-2023/