Quick Answer
Using cryptocurrency for transactions in Ethiopia is currently illegal.
- Ethiopia's central bank has declared crypto transactions unlawful.
- However, the government has engaged in some crypto mining activities.
Legal Status of Crypto in Ethiopia
The legal status of cryptocurrency in Ethiopia is complex and somewhat contradictory. The National Bank of Ethiopia (NBE) has explicitly declared that using digital currencies for transactions is illegal, reinforcing the Ethiopian Birr as the only legal tender. However, this clear prohibition is contrasted by the actions of other state bodies, such as the Information Network Security Administration (INSA), which has been mandated to register and control certain crypto operations. This has created a regulatory gray area where transactions are forbidden, yet the underlying technology and related activities are being acknowledged, all in the absence of a comprehensive legal framework governing digital assets.
Current Regulations
The National Bank of Ethiopia (NBE) has declared that using digital currencies for transactions is illegal, warning that violators will face strict legal action. According to the NBE, the Ethiopian Birr is the only legal currency, and all financial transactions must be conducted with it. Adding a layer of complexity, the Information Network Security Administration (INSA) now requires any individuals or entities involved in "crypto operations" to register with the authority, following an expansion of its mandate to regulate cryptographic products.
Regulatory Authorities
Several government bodies are involved in the oversight and regulation of financial activities, which extends to the emerging crypto sector.
- National Bank of Ethiopia (NBE): As the country's central bank and primary financial regulator, the NBE is responsible for all monetary policy and has declared that only the Ethiopian Birr is legal tender for transactions. It also oversees the licensing of financial services and has stated that no crypto exchanges are officially recognized or licensed to operate in Ethiopia.
- Information Network Security Administration (INSA): INSA is empowered to regulate cryptographic products and their transactions, setting the technical criteria and operating procedures for their use. Following a parliamentary amendment, the agency now requires all individuals and entities involved in crypto operations to register with it.
- Financial Intelligence Center (FIC): The FIC serves as Ethiopia's national authority for Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) compliance. It is responsible for receiving and analyzing Suspicious Transaction Reports (STRs), though its oversight is limited as crypto transactions often bypass regulated financial institutions.
- Ministry of Finance: The Ministry of Finance provides high-level policy and regulatory oversight for the entire financial sector. It is involved in the development and implementation of financial laws, including those related to AML/CFT.
- Ministry of Revenue: This body is responsible for collecting taxes, but the current legal definitions of income and assets do not explicitly cover gains from cryptocurrency. As a result, the Ministry does not currently collect tax from income earned by exchanging cryptocurrency for fiat currency, as noted in an academic paper from Addis Ababa University.
- Trade Competition and Consumer Protection Authority (TCCPA): The TCCPA is tasked with enforcing consumer rights and handling related disputes. However, it faces significant challenges in protecting consumers in cryptocurrency disputes due to the anonymous nature of the transactions.
Historical Context
Ethiopia’s crypto regulation evolved from a period of observation to active, albeit contradictory, intervention. Before 2022, the country maintained a cautious stance without a formal legal framework, as noted in academic papers from 2021. The key policy shift came in 2022 when the National Bank of Ethiopia (NBE) declared the use of digital currencies for transactions illegal. However, this prohibition was quickly complicated when the Information Network Security Administration (INSA) was mandated to register all crypto operations. This created a dual policy where transactions are banned, but the government is simultaneously exploring the economic benefits of the industry, such as through recent agreements to foster Bitcoin mining.
Compliance Requirements for Businesses in Ethiopia
Businesses operating in Ethiopia must adhere to a strict set of compliance rules designed to prevent financial crime. According to a comprehensive compliance guide, these obligations are rooted in key legislation like Proclamation No. 780/2013 and are enforced by bodies such as the NBE and FIC. Essential requirements include:
- AML Checks: Key anti-money laundering measures include mandatory Know Your Customer (KYC) and Customer Due Diligence (CDD) procedures, with enhanced due diligence for Politically Exposed Persons (PEPs) and other high-risk clients. Firms must conduct ongoing transaction monitoring and screen against UN and local sanctions lists, with immediate asset freezes for any matches. Suspicious Transaction Reports (STRs) must be filed within 24 hours, and Currency Transaction Reports (CTRs) are required for transactions over ETB 500,000.
- KYC Requirements: As part of the mandatory KYC/CDD process, businesses must collect and verify customer identification information. Special attention is required for complex ownership structures and ensuring beneficial ownership transparency, as outlined in Proclamation No. 1237/2021. The process also involves ongoing monitoring of customer transactions, regularly updating customer files, and specific reporting for both domestic and foreign PEPs.
- Other Mandatory Procedures: Broader compliance duties include filing annual compliance reports by March 31st and adhering to data protection laws, which require data localization for financial records and breach notifications within 72 hours. All customer and transaction records must be retained for at least 10 years. Furthermore, companies are obligated to provide mandatory AML/CFT training for all staff within 30 days of joining and annually thereafter, supplemented by regular internal audits and risk assessments.
Why this matters for Cross-Border Payments
For businesses engaged in cross-border payments, Ethiopia's regulatory landscape presents significant hurdles. The outright ban on cryptocurrency transactions closes off a fast and cost-effective channel for international settlements, forcing companies to rely on traditional, often slower, banking systems. This reliance introduces major pain points, including heightened compliance burdens from strict AML/KYC protocols, operational delays, and the legal ambiguity surrounding digital assets, all of which can deter foreign investment and complicate global trade.
How Lightspark Enables Compliant Crypto-Native Payments
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For regulated institutions facing strict compliance burdens, Lightspark provides the tools to operate on this modern payment rail. The platform facilitates adherence to regulations through features like audit-ready reporting, flexible key management, and built-in support for Travel Rule and OFAC screening. This allows businesses to leverage crypto-native speed while meeting their own rigorous KYC and AML obligations, like those required in Ethiopia.
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Notice: This article is provided for informational purposes only and does not constitute legal advice.
Sources
- "Ethiopia AML and Sanctions Summary & Compliance Obligations." Anqa Compliance, 2025, www.anqacompliance.com/ethiopia-aml-sanctions-compliance.
- "Ethiopia & Cryptocurrency | Blockchain & Cryptocurrency Laws & Regulations." Freeman Law, 2022, freemanlaw.com/cryptocurrency/ethiopia/.
- Girma, Samuel. "The Legal Status and Regulation of Cryptocurrency in Ethiopia." Addis Ababa University Electronic Thesis and Dissertation, May 2021, etd.aau.edu.et/handle/123456789/27974.
- Gobena, Messay Asgedom. "The Regulation of Cryptocurrencies under Ethiopian Legal Norms." Mizan Law Review, vol. 15, no. 1, Sep. 2021, pp. 173-94, doi:10.4314/mlr.v15i1.6.
- National Bank of Ethiopia. Requirements for Licensing and Renewal of Banking Business and Representative Office Directive No. SBB/94/2025. 25 June 2025, nbe.gov.et/wp-content/uploads/2025/06/REQUIREMENTS-FOR-LICENSING-AND-RENEWAL-OF-BANKING-BUSINESS-AND-REPRESENTATIVE-OFFICE-DIRECTIVE-NO.-SBB942025-1.pdf.
- Yoseph, Geda. "Bitcoin in Ethiopia and the Legal Regime." Dagnachew & Mahlet Law Firm Limited Liability Partnership, 25 Feb. 2024, dmethiolawyers.com/bitcoin-in-ethiopia-and-the-legal-regime/.
