Ghana’s central bank has published draft guidelines for Virtual Asset Service Providers.

According to the Bank of Ghana’s Aug. 16 draft, the nation has witnessed a spike in demand for cryptocurrencies, prompting the need for regulations to counter the various risks typically associated with the emerging asset class.

Ghana, like other South African nations, has confronted economic challenges, pushing residents towards alternative assets such as Bitcoin (BTC) as a shield against inflation. As detailed by the bank, the growth has been spurred by a tech-savvy population, widespread internet access, and the rise of VASPs.

The central bank proposed several key measures to regulate the sector, including stringent registration requirements, enhanced reporting obligations, and compliance with global standards.

Per the draft law, VASPs will be required to adhere to anti-money laundering and counter-terrorism financing regulations and report suspicious transactions to the Financial Intelligence Centre. The entities would also be mandated to conduct regular risk assessments and comply with the FATF’s Travel Rule, which requires reporting transaction details.

When signed into law, VASPs would have to register with the Bank of Ghana or the Securities and Exchange Commission, depending on the offering. To offer services, such entities must “demonstrate a satisfactory internal control and risk management framework” alongside capital and solvency requirements. VASPs that don’t register within the specified timeframe would be deemed illegal.

Before fully implementing these regulations, the BoG plans to collaborate with other regulatory bodies to conduct a “sandbox testing process” with a controlled group of VASPs.

Meanwhile, financial institutions and commercial banks would only be allowed to process transactions for registered VASPs under specific conditions. The firms would not be allowed to interact directly with virtual assets or provide custody services.

The draft regulations are currently open for public feedback until Aug. 31, 2024, after which they will be reviewed and potentially finalized.

The Bank of Ghana is also developing its central bank digital currency, the eCedi. To provide the base infrastructure for the project, it has partnered with Giesecke+Devrient, a German banknote and securities printing company.