Cape Verde Introduces New Regulations for Banking Sector and Virtual Assets

Strengthening Financial Regulatory Framework

In a move to bolster its financial regulatory framework, Cape Verde has introduced new laws governing the provision of services with virtual assets and the establishment of digital banks. Law 30/X/2023, published in the Official Bulletin on June 21, 2023, came into effect on June 22, 2023.

Definition of Virtual Assets

The legislation defines virtual assets as any digital representation of value that is not necessarily linked to a legally established currency and does not have the legal status of fiat money but is accepted by natural or legal persons as a means of exchange or investment. This definition brings Cape Verde in line with recent global trends regarding virtual assets.

Compliance Requirements

The law requires entities intending to carry out activities with virtual assets in Cape Verde to comply with duties and obligations aimed at preventing:

• Money laundering
• Terrorism financing
• Other financial crimes

The Banco de Cabo Verde has been designated as the competent authority responsible for verifying compliance by entities subject to its supervision. Prior registration with the bank is now mandatory for entities wishing to operate professionally in the national territory.

Digital Banks Regulation

The law also regulates the establishment of digital banks that provide retail banking services through internet or electronic channels. Digital banks will be subject to the same requirements and obligations as traditional banks, including:

• Capital requirements
• Risk management and controls
• Other legal duties

However, Banco de Cabo Verde may impose specific market access conditions for digital banks and adjust certain requirements based on a risk assessment.

A Step Forward in Digitalization

The law is seen as a step forward in the digitalization of Cape Verde’s financial system, which aims to promote innovation and stability in the banking sector.