National Bank of Ethiopia Reiterates Ban on Unauthorized Virtual Asset Activities
Key Takeaways
- •The National Bank of Ethiopia prohibits all virtual asset activities unless expressly authorized, covering use, purchase, sale, exchange, transfer, trading, and facilitation of such transactions.
- •The prohibition extends beyond cryptocurrencies to include all electronically tradable digital representations of value used for payment, investment, or similar purposes.
- •The central bank warned that engaging in virtual asset transactions exposes users to legal risks, fraud, scams, cyber threats, market manipulation, and substantial financial losses.
- •Ethiopia's strict enforcement posture contrasts with other African markets like Nigeria and South Africa, which have moved toward licensing regimes and formal regulation of crypto asset service providers.
The National Bank of Ethiopia has reiterated that the use, purchase, sale, exchange, transfer, trading, settlement, and facilitation of transactions involving virtual assets are prohibited unless expressly authorized by the central bank under Ethiopia's existing legal framework.
The central bank said the prohibition is not limited to cryptocurrencies. It also applies to digital representations of value that can be electronically traded, transferred, exchanged, or used for payment, investment, or similar purposes.
According to the National Bank of Ethiopia, the prohibition on virtual assets should be understood to cover one or more of the following activities:
- Exchange between virtual assets and fiat currencies;
- Exchange between one or more forms of virtual assets;
- Transfer of virtual assets;
- Safekeeping and/or administration of virtual assets or instruments enabling control over virtual assets; and
- Participation in, and provision of, financial services related to an issuer's offer and/or sale of a virtual asset.
The National Bank of Ethiopia advised members of the public to refrain from engaging in any transactions or activities involving virtual assets as outlined above. It said such activities may expose users to significant risks, including legal risks, fraud, scams, cyber-related threats, operational failures, market manipulation, and substantial financial losses.
The notice follows previous warnings from the Bank of Ethiopia that birr-paired peer-to-peer crypto transactions are prohibited. Ethiopia has experienced sustained foreign exchange shortages and birr depreciation pressures in recent years, conditions that have driven cryptocurrency adoption in other developing economies as residents seek alternatives for payments and value transfer.
Ethiopia's stance contrasts with a broader shift across several African markets. Nigeria's central bank lifted its prohibition on crypto transactions in December 2023 and moved toward a licensing regime, while South Africa has advanced formal regulation of crypto asset service providers. Ethiopia's reiteration signals a continued enforcement posture rather than a move toward the supervised frameworks being adopted elsewhere on the continent.