Swaziland and Cryptocurrency

Swaziland Cryptocurrency Laws
Regulation of Digital Currencies: Cryptocurrency, Bitcoins, Blockchain Technology

Eswatini, formerly known as Swaziland, has a cryptocurrency legal framework that is somewhat undeveloped. Eswatini is a small country and is Africa’s last absolute monarchy. The monarch, known as Ngwenyama, announced in April 2018 that the country was being renamed “the Kingdom of eSwatini.” Ngwenyama is known for his traditional dress and fifteen wives. In his country, cryptocurrencies are not classified as legal tender, and cryptocurrencies are not specifically regulated.

Nevertheless, the Central Bank of Eswatini (CBE) announced that it is researching cryptocurrency to learn how to “support innovation.” Majozie Sithole, the Chief of the CBE, proclaimed that the agency intends to avoid stifling the technological development of cryptocurrency. Suggesting that cryptocurrencies will be relevant in the long term, Sithole stated that “it may not be wise to dismiss virtual currencies.” The goal of the CBE is to promote safe and accessible payment systems. To do so, the bank actively studies new technological developments, such as cryptocurrency. The CBE conducts research to learn how to protect African investors and ensure Eswatini’s “regulatory framework remains relevant and appropriate.”

Despite the government’s optimism towards cryptocurrencies, the CBE issued warnings that cryptocurrencies are virtually unregulated. Consequently, there is a risk that investors will be left with no method of recovering financial losses because “there is no protection or legal recourse available from any institution including the Central Bank.” Additionally, the CBE cautioned that “some people take advantage of the platform to create pyramid schemes.” Finally, according to the CBE, cryptocurrencies facilitate fraudulent activity because “there are no restrictions, disclosures or regulatory compliance applicable to [cryptocurrency] transactions.” In other words, cryptocurrency is not subject to AML and KYC regulations in Eswatini.

Due to the risks associated with cryptocurrency trading, the CBE recognized the need for cryptocurrency regulation. However, the CBE stated that the government of Eswatini is not yet at a point where it can make a fully informed decision on proper cryptocurrency regulations. Consequently, the CBE declared that more research must be conducted before regulations can be safely introduced.

To implement safe cryptocurrency regulations, the fintech division within the banking industry regulator was assigned to monitor other countries to learn how to properly regulate virtual currencies. Nevertheless, at the time of this writing, no cryptocurrency-specific regulations have been enacted within Eswatini.

P.S. Insights on Cryptocurrency Legal Issues

Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear.

Under the Financial Crimes Enforcement Network (FinCEN), crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity. In Israel, for instance, crypto mining is treated as a business and is subject to corporate income tax. In India and elsewhere, regulatory uncertainty persists, although Canada and the United States are relatively friendly to crypto mining.

However, apart from jurisdictions that have specifically banned cryptocurrency-related activities, very few countries prohibit crypto mining.

Our Freeman Law Cryptocurrency Law Resource page provides a summary of the legal status of cryptocurrency for each country across the globe with statutory or regulatory provisions governing cryptocurrency.  The globe below provides links to country-by-country summaries:

Podcast:

The Freeman Law Project – Cryptocurrency Regulation and Taxation: A Brief Primer

Is cryptocurrency legal in Swaziland?

Do you have questions about cryptocurrency, digital currencies, or blockchain technology?
Freeman Law can help with digital currencies, tax planning, and tax compliance. Contact us now to schedule a consultation or call (214) 984-3410 to discuss your cryptocurrency and blockchain technology concerns.


WORKS CITED

  1. BBC News. (2018, April 19). Swaziland king renames country “the Kingdom of eSwatini.” BBC News; BBC News. https://www.bbc.com/news/world-africa-43821512
  2. Mbogo, A. (2018, August 21). SA & Swaziland Have the Friendliest Crypto Environment in Sub-Saharan Africa. Kenyan Wallstreet; https://kenyanwallstreet.com/sa-swaziland-have-the-friendliest-crypto-environment-in-sub-saharan-africa/
  3. Higgins, S. (2017, November). Swaziland Central Bank Governor: It is “Not Wise” to Dismiss Cryptocurrency – CoinDesk. CoinDesk; CoinDesk. https://www.coindesk.com/swazilands-central-bank-is-researching-local-use-of-cryptocurrencies
  4. Freeman, J. B. (2020, November 21). Swaziland and Cryptocurrency. Freeman Law. https://freemanlaw.com/swaziland-and-cryptocurrency/
  5. Dhladhla, K. Times Of Swaziland (2019). Times.co.sz. http://www.times.co.sz/business/122004-cbe-to-allow-cryptocurrency-if%E2%80%A6.html
  6. Baker McKenzie, Johannesburg (2018). Blockchain and Cryptocurrency in Africa A comparative summary of the reception and regulation of Blockchain and Cryptocurrency in Africa. https://www.bakermckenzie.com/-/media/files/insight/publications/2019/02/report_blockchainandcryptocurrencyreg_feb2019.pdf
  7. The State of Cryptocurrency Regulation in Sub-Saharan Africa – The Crypto University. (2020, August 4). The Crypto University. https://cryptouniversity.co.za/the-state-of-cryptocurrency-regulation-in-sub-saharan-africa/
  8. Crowhurst, F. (2017, November 5). Swaziland may be the latest country to tap into cryptocurrencies. Cryptodaily.co.uk; CryptoDaily. https://cryptodaily.co.uk/2017/11/swaziland-may-latest-country-tap-cryptocurrencies
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