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Cryptocurrency and Financial Crime in Lesotho: A Growing Concern

In recent years, cryptocurrency has become an increasingly popular topic of discussion, with many countries struggling to regulate its use. Lesotho is no exception. In a move to curb financial crime, the Central Bank of Lesotho has issued a stern warning against cryptocurrencies, stating that they are neither legal tender nor foreign currency.

Risks Associated with Cryptocurrencies

The bank’s statement warns citizens of the risks associated with cryptocurrencies, emphasizing that they expose participants to violations of anti-money laundering and combating of terrorist financing laws, tax laws, and exchange control laws - transgressions that can lead to prosecution. These risks are a major concern for regulators and law enforcement agencies worldwide.

Regulatory Efforts in Lesotho

The Lesotho government has also taken steps to regulate digital currencies. In November 2019, a Memorandum of Understanding was signed between the Apollo cryptocurrency platform and the government. The agreement aims to explore the implementation of Apollo cryptocurrency in various governmental initiatives, including:

A voting system
Decentralized file storage
An online marketplace for buying and selling physical and digital goods

Regulatory Uncertainty Persists

Despite these efforts, regulatory uncertainty persists in Lesotho regarding cryptocurrencies. Many jurisdictions have yet to enact laws governing digital currencies, leaving the legality of crypto mining unclear. In Lesotho, crypto miners are considered money transmitters, subjecting them to laws that govern such activity.

International Comparisons

While a few countries have banned cryptocurrency-related activities, very few prohibit crypto mining. Israel treats crypto mining as a business and subjects it to corporate income tax, while Canada and the United States have relatively favorable regulations for crypto mining.

Freeman Law’s Cryptocurrency Resource Page

Freeman Law’s Cryptocurrency Law Resource page provides a summary of the legal status of cryptocurrency in each country, with statutory or regulatory provisions governing digital currencies. For Lesotho, our resource page offers insights on the legality of cryptocurrency and its potential implications for financial crime.

If you have questions about cryptocurrency, digital currencies, or blockchain technology, Freeman Law can help with:

Digital currency tax planning
Compliance
And more