In Lesotho, cryptocurrency and other virtual assets are largely unregulated. However, a closer examination of the legal framework suggests that while cryptocurrency trading is not explicitly prohibited, it may still present legal risks.
The Central Bank of Lesotho (“CBL”) has expressed concerns regarding the risks associated with cryptocurrencies. In an official statement, the CBL warned that cryptocurrency transactions could lead to violations of anti-money laundering (AML) and counter-terrorist financing laws, tax regulations, and exchange control laws. This suggests that while cryptocurrency itself is not banned, individuals engaging in its trade must ensure compliance with existing financial regulations.
A key piece of legislation governing financial activities in Lesotho is the Financial Institutions Act, 2012. This law regulates both banking and non-banking financial institutions but does not explicitly cover cryptocurrency transactions. As a result, cryptocurrency trading falls outside the scope of traditional financial regulation. Similarly, the Central Bank of Lesotho Act and related regulations do not provide the CBL with direct authority to oversee cryptocurrency activities. This is largely because cryptocurrencies do not fit within the legal definition of securities under the applicable regulations.
Although buying and selling cryptocurrency is not inherently illegal, it can still result in non-compliance with tax, money laundering, and exchange control laws. For example, individuals who fail to declare cryptocurrency-related income to the Revenue Service Lesotho (“RSL”) or neglect to obtain exchange control approvals where necessary may be in violation of existing financial laws. The decentralized and largely anonymous nature of cryptocurrency transactions increases the likelihood of regulatory breaches, even if unintentionally.
In conclusion, there is no clear legal basis to classify cryptocurrency trading as illegal in Lesotho. However, individuals involved in cryptocurrency transactions must be cautious, as they may inadvertently breach tax, AML, and exchange control laws. Given the evolving nature of digital assets, it is advisable for traders and investors to stay informed about regulatory developments and ensure compliance with financial laws.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.
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