Policy

Morocco publishes proposed rules to regulate cryptocurrency

The new rules establish a licensing regime for VASPs and bring them under the purview of BAM and AMMC

By Ifeoluwa Awowoye, exclusively for Mariblock.

The Moroccan Ministry of Economy and Finance has published proposed rules to regulate the cryptocurrencies and virtual asset service providers (VASPs) in the North African country.

Among other provisions, the draft rules are set to bring cryptocurrencies and VASPs under the regulatory ambit of the Moroccan Capital Markets Authority (AMMC) and the country’s apex bank, Bank Al-Maghrib (BAM).

The details

The policy document, titled Bill 42.25 and published on the website of the secretary-general to the Moroccan government, outlined the extent to which the country wants to regulate digital assets.

According to the country’s authorities, the aim of the law is to encourage innovation while protecting users and enforcing global anti-money laundering laws
Timelines for when the law comes into effect are currently unclear. In addition, it is not certain if and when the country’s regulators plan to release additional provisions for a full crypto regulatory regime.

Dive deeper

Bill 42.25 outlined a set of rules to guide the issuance and trading of digital assets as well as regulate companies that facilitate these activities.

While the document scope covers digital assets and cryptocurrencies, it leaves out central bank digital currencies — which BAM has looked into before now — non-fungible tokens, and crypto mining.
The law also does not provide legal coverage for decentralized finance and other digital financial instruments already captured by existing capital market laws.

How the framework is structured

The law empowers the AMMC to license and oversee VASPs as well as regulate the issuance, listing and trade of digital tokens.

Bank Al-Maghrib, on the other hand, will provide regulation for the issuers of asset-backed tokens such as local stablecoins.
Regulators maintain a range of punishments to mete out to VASPs that do not comply with their directives, including license revocation, fines and prison sentences, all of which are not disclosed in detail.

Licensing process and compliance

VASPs that seek to be licensed in the country must be incorporated in Morocco, and firms that seek to provide crypto-based financial services must secure BAM’s approval before applying to get a license from the AMMC.

In addition, operators of custodial exchanges, on-ramp and off-ramp platforms, crypto asset managers and companies that provide advisory services on crypto assets are firmly captured in the law’s scope.
These companies must demonstrate the capacity to deploy and manage anti-money laundering/combating terrorism financing (AML/CFT) controls and apply to the AMMC for licensing.
These controls include keeping and sharing the information of the participants in a transaction, collaborating with other regulators and reporting suspicious activities.
On its part, the AMMC has a maximum of 120 days to process applications and a two-month window to either turn down or accept licensing requests.