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Morocco drafts crypto laws to regulate digital assets, marking a shift from the 2017 cryptocurrency ban.
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The country draws inspiration from the EU’s MiCA framework, aligning with global efforts to manage digital currencies.
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The Moroccan Central Bank is exploring CBDCs to modernize financial systems and enhance financial inclusion.
According to a recent report by Reuters, Morocco is taking a step towards adopting the cryptocurrency ecosystem by drafting legislation to regulate digital assets. This move marks a shift from its 2017 ban on cryptocurrencies. The move by Bank Al-Maghrib, Morocco’s central bank, signals the country’s intent to adapt to the growing importance of digital assets in the global financial landscape.
Morocco Drafts Crypto Law, Eyes Blockchain Growth
The development aligns with the increasing global efforts to establish comprehensive regulatory frameworks inspired by the European Union’s forthcoming Markets in Crypto-Assets Regulation (MiCA) as governments and central banks are working to regulate digital assets with countries like the United States, the European Union, and India are exploring and implementing comprehensive cryptocurrency regulations.
This development stresses the country’s willingness to adapt to global financial trends while exploring the transformative potential of technologies like blockchain and digital currencies. The announcement follows earlier news of a $1.1 billion investment in AI and blockchain startups, as noted by TierUp Daily via the X platform.
https://x.com/Tier_Up_Crypto/status/1861467694232387717
As revealed by Abdellatif Jouahri, the governor of the Moroccan Central Bank, the draft law is under review. This new policy aims to formalize the use and trading of cryptocurrencies in the country, providing a legal foundation for an underground market for digital assets in Morocco. The draft law is expected to undergo further deliberation before formal adoption, and its impact on Morocco’s financial ecosystem will depend on the details of its implementation.
A Bruneian crypto payments company Triple-A report highlights Morocco’s prominence in cryptocurrency adoption within North Africa. As of January 2023, the country ranked globally, with 5.08% of ownership. Regarding crypto trading volume, Morocco secured the fourth spot in Africa in 2021, with $6 million traded, trailing behind Nigeria, South Africa, and Kenya.
Global Crypto Shift: From Bans to Regulation
Morocco initially imposed a nationwide ban on Bitcoin and other cryptocurrencies in November 2017, citing concerns over financial stability and consumer protection. Despite the prohibition, cryptocurrency transactions persisted, with a notable portion of the population engaging in digital asset trading and holding through underground channels. The informal adoption of cryptocurrencies indicated a growing demand for alternative financial instruments, prompting policymakers to reconsider their stance.
At the time, the global regulatory environment was marked by widespread skepticism about cryptocurrencies, as many governments issued warnings regarding their unregulated and volatile nature. This sentiment shaped policies aimed at limiting digital asset activities.
Bolivia, the first country to implement a complete ban on cryptocurrencies, announced its decision to lift the restriction earlier this year. The move is part of an effort to modernize its payment systems. Under the new framework, financial institutions can now engage in digital asset transactions.
China’s stance on crypto began with restrictions in 2013 and escalated to a total ban in 2021. The People’s Bank of China (PBOC) initially prohibited financial institutions from offering services related to cryptocurrencies. This was later expanded to a blanket ban on all crypto transactions, including initial coin offerings and domestic exchanges.
The central bank’s draft legislation reflects a broader recognition of the need for structured regulation, rather than outright prohibition, to manage the risks and opportunities presented by cryptocurrencies. By legalizing and regulating digital assets, Morocco seeks to address concerns about illicit activities while promoting innovation in the financial sector.
Exploration of a Central Bank Digital Currency (CBDC)
In addition to regulating cryptocurrencies, Bank Al-Maghrib is actively exploring the potential introduction of a central bank digital currency (CBDC). According to Jouahri, the central bank aims to evaluate how a CBDC could contribute to public policy objectives, such as enhancing financial inclusion.
CBDCs differ from decentralized cryptocurrencies like Bitcoin and Ethereum as they operate on permissioned blockchain networks controlled by central authorities. The Moroccan central bank’s interest in this area underscores its ambition to modernize its financial infrastructure while maintaining oversight and control.
Exploring a CBDC aligns with global trends, where many countries are investigating the feasibility of digital currencies to complement existing monetary systems. Morocco’s interest in CBDCs demonstrates its proactive approach to leveraging digital technologies for financial development.
Global Influence: MiCA as a Regulatory Model
Morocco’s regulatory initiative draws inspiration from the European Union’s Markets in Crypto-Assets Regulation (MiCA), the world’s first comprehensive regulatory framework for digital assets. MiCA, set to be implemented by the end of 2024, has set a precedent for other nations to follow in developing clear and enforceable rules for the cryptocurrency market.
Currently, 134 countries are actively exploring central bank digital currencies (CBDCs), according to data compiled by the Atlantic Council. This marks a significant increase from just 35 nations reported in May 2020. Out of these, 66 countries have progressed to advanced stages, including development, pilot programs, or full-scale launches. The data further reveals that all G20 member nations are involved in CBDC exploration, with 19 already reaching advanced phases in their efforts.
The EU’s framework has sparked widespread interest globally, with countries like the United Kingdom announcing roadmaps to regulate digital assets. On November 26, the UK’s Financial Conduct Authority (FCA) unveiled plans to establish a regulatory framework by 2026, following reports that over 12% of UK adults hold cryptocurrencies. Morocco’s alignment with MiCA principles indicates its commitment to international standards in cryptocurrency regulation.
Bitcoin Surge and Market Context
The timing of Morocco’s regulatory push coincides with heightened interest in Bitcoin, which recently approached a historic milestone of $100,000. On November 22, Bitcoin came within $200 of breaking the six-figure barrier for the first time, signaling strong market momentum and increased adoption.
This surge has reignited global interest in cryptocurrencies, including regions with previously restrictive policies. Morocco’s move to regulate cryptocurrencies aligns with this broader trend as countries recognize the growing significance of digital assets in modern economies.
Morocco’s decision to draft legislation for cryptocurrency regulation marks a pivotal moment in the country’s financial policy. Morocco aims to balance innovation with risk management by moving from prohibition to regulation, ensuring that robust legal and institutional frameworks meet the growing demand for digital assets.
