Crypto Regulation in Eswatini
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.
Source: Freeman Law
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.
Source: Freeman Law
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
Source: Freeman Law
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.
Source: Freeman Law
Cryptocurrencies are currently unregulated in Eswatini; therefore, investors do not benefit from the legal protection associated with regulated instruments.
Source: Central Bank
In August 2017, the Central Bank of Eswatini advised that “there are no restrictions, disclosures or regulatory compliance applicable to transactions executed using Bitcoin.” The Central Bank however noted that a risk is presented to users of cryptocurrencies as “there is no protection or legal recourse available from any institution including the Central Bank in the event that the user suffers financial loss from the use of Bitcoin or any other cryptocurrency.
Source: Baker Mckenzie
The Central Bank of Eswatini (CBE) is pleased to present a report on the first phase of our Central Bank Digital Currency (CBDC) Diagnostic Study. This report provides a summary of the findings of the diagnostic study which investigated the potential for a CBDC and the possible use cases for the implementation of a CBDC in Eswatini. Many Central Banks and regulators around the world are exploring the potential of CBDCs to address challenges such as payment efficiency, interoperability, financial inclusion and payment system resilience. Most regulators are researching and experimenting with different CBDC use cases to understand their potential to address inefficiencies and unlock new possibilities in payments. Similarly, the CBE has been investigating CBDCs through mainly desk research.
Source: TechCrunch
The central bank of eSwatini has therefore noted that there have been reported cases of Bitcoin usage in the kingdom of eSwatini. However, with this growth the eSwatini Revenue Services has not made any statement or pronounciation on the possible tax treatment of the Cryptocurrency whilst on the other hand the central bank of eSwatini has begun the process of conducting research on how to regulate Cryptocurrencies in eSwatini. This situation in eSwatini has therefore presented us with a gap in literature and therefore an opportunity to conduct this study ensued on how Bitcoin can be treated for Income Tax purposes by the eSwatini Income Tax Order. This study has been conducted by focusing mainly on the direct tax consequences of the Cryptocurrency in eSwatini and South Africa, which may arise, and an examination of possible gaps in the eSwatini jurisdiction since there has been no pronounciation by the eSwatini Revenue Authority. Furthermore, brief lessons from the United Kingdom and the United States of America’s position on the tax treatment and regulation of the Cryptocurrency have been explored.
Source: ResearchSpace
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The central bank of one of Africa’s smallest countries, Eswatini, is stepping up its explorations into a potential central bank digital currency (CBDC).
The Central Bank of Eswatini (formerly Swaziland) has signed an agreement with Munich-headquartered Giesecke+Devrient (G+D) – a company that has provided the country’s physical currency since the 1980s and is also working on CBDC in the West African nation of Ghana – to extend and deepen CBDC work.
Source: Global Government Fintech
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The first Fintech start-up to be admitted to the CBE Sandbox in December 2020 was Digi-image Investments (S@lvTec). The Digi-image admitted solution is ePayNet, a mobile app offering payments, funds transfer and bulk payments solutions.
Digi-image’s payment solution includes processing payments such as school fees, giving (church, individuals & NGOs) and utility bills payment using funds in a Mobile Money wallet or bank account. The funds transfer solution allows consumers to move money from their bank accounts using bank channels to any Mobile Money subscriber at a reduced cost. Lastly, the bulk payment solution allows the payment of salaries and disbursement of small loans to Mobile Money subscribers. Collections from Mobile Money subscribers is also possible through their stop-order module.
Source: Central Bank
