Morocco’s central bank is now working on crypto regulation, what this means

According to the governor of Morocco’s central bank, Abdellatif Jouahri, the country is working on a final regulatory framework to guide the crypto sector, with the help of established industry players. And this framework is expected to be submitted soon. 

Jouahri reportedly said that they had formed a committee that was “working to put in place an appropriate regulatory framework to combine innovation, technology, and consumer protection.”

He also noted that the central bank, Bank Al-Maghrib (BAM), is in contact with both the International Monetary Fund (IMF) and the World Bank about the standards to be used. 

This is important because the development hints that the regulation is not going to ban crypto, but rather guide its usage in the country.

Recall that the IMF has been calling on countries to regulate the crypto sector. Although, they issue warnings on the dangers of legalising digital assets like Bitcoin.

Background 

In March, the Moroccan central bank acknowledged the growth of cryptocurrency in the country and announced that it was “engaging with the central banks of friendly nations such as Switzerland and France to learn from their expertise and experience.”

The Governor, Jouahri also confirmed that the institution was in discussions with two other major financial institutions and noted that adopting cryptocurrencies in the country was a matter of ‘when’ and not ‘if’ because it ‘represents the future’. 

Currently, we cannot adopt cryptocurrencies given the lack of regulatory and legislative frameworks both nationally and internationally. The G20 and many countries stress the importance of having a crypto regulatory framework as well as a regulatory framework for CBDCs (Central Bank Digital Currencies).

Abdellatif Jouahri

Those comments came after a number of people asked the government to regulate the cryptocurrency business at that time. And, according to the Governor, the meetings’ focus was on the most effective ways to regulate cryptocurrencies.

How the nascent regulation will work

Although the use of cryptocurrencies by Moroccans looks unavoidable, the governor maintains that the adoption should not take place until there is a legal framework in place.

Notably, the country has not given any indication that it is looking to make bitcoin legal tender, however, the regulation will be drafted with innovation and consumer protection as top priorities.

In addition, the announcement points out money laundering and terrorism financing as the key areas the regulatory framework will address, noting that:

“The regulatory framework will also update the legislation on the fight against money laundering and terrorist financing.”

The central bank further advises consumers to consider the risk when looking to invest in crypto.

Crypto in Morocco

Morocco, like many other African countries, banned crypto trading in 2017 and subsequently issued multiple warnings over the usage of digital assets, citing a lack of consumer protection, wild volatility, and their use for illicit purposes. 

However, the adoption of cryptocurrencies in the North African country has continued to surge.

According to a report from a Bruneian crypto payments company, Triple-A, Morocco was leading in the North Africa region and was number 50 in the world in crypto adoption as of January 2022. Data also shows that 2.4% of Moroccans use or own digital assets.

The latest data in 2021 also shows that the country ranked fourth behind Nigeria, South Africa, and Kenya in crypto trading volume ($6 million) across Africa.

The Moroccan authorities acknowledged this development in April when it released a statement signed by the central bank, the country’s Capital Market Authority and the Foreign Exchange Office.

The statement noted that despite repeated warnings and clarifications on the risks associated with holding and trading in cryptocurrencies, data suggested that digital assets remain highly popular. The financial authorities further urged citizens to comply with regulations relating to trading with cryptocurrencies.

Interestingly, those impressive figures came under harsh and unfavourable conditions. The popularity of cryptocurrency in the country propelled the government to no longer ignore its growing prominence. 

Going forward, the proposed regulation is expected to provide clarity in the country’s crypto sector, which will further enhance adoption and acceptability of digital assets.