The State of Crypto Regulation: Tanzania

Tanzania explores regulations and CBDC to navigate the complex landscape of cryptocurrencies and blockchain technology.

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Umoja Protocol

8 min readJul 11, 2023

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The Regulatory TLDR

Policy & Regulation Status: Nascent Regulatory Environment, with Blockchain Regulatory Assessment Score of 31.17/100.
Number of Cryptocurrency Owners: ~1.57M (~2.34% of Country)
Summary: Regulators are gradually embracing blockchain technology after initially having a very harsh attitude against the technology. However, political leadership have noted usage of the technology should be prioritized to advance digital financial inclusion goals, which has started to change regulatory sentiment for the better.

The Tanzanian Crypto Ecosystem

Overall, there are an estimated 1.57 million cryptocurrency owners in South Africa, representing approximately 2.34% of the country’s populations. On Umoja Lab’s BRAF (Blockchain Regulatory Assessment Framework), Tanzania is rated a 31.17 out of 100, indicating that it is a “Nascent Regulatory Environment” that requires more clarity on the legality of cryptocurrencies and how may Web3 companies best achieve (and maintain) compliance.

A Regulatory Overview

Tanzania currently does not have specific regulations or legislation governing digital currencies. The use of cryptocurrencies is banned, and the only accepted legal tender is the Tanzanian Shilling. The Bank of Tanzania has issued a public notice cautioning the public against trading and using virtual currencies, stating that they are not recognized or authorized in the country.

Despite the ban, Tanzania has a significant cryptocurrency mining sector. The country is ranked 72 out of 249 countries involved in digital currency mining. This mining activity is predicted to consume more electricity than the entire country’s non-cryptocurrency-related electricity consumption.

Globally, the legal status of cryptocurrencies varies across jurisdictions. Most countries have yet to enact laws governing cryptocurrencies, and the legality of crypto mining remains unclear in many countries. Some countries treat crypto mining as a business subject to corporate income tax, while others have regulatory uncertainty. However, very few countries prohibit crypto mining outright.

Taking a Deeper Dive

The Bank of Tanzania has implemented a ban on cryptocurrencies and warns the public against trading and using virtual currencies. Despite the ban, Tanzania has a thriving cryptocurrency mining sector, raising questions about the ban’s effectiveness and the necessity for comprehensive regulations to govern cryptocurrency use in the country.

Tanzania is considering the development of a central bank digital currency (CBDC) as discussed in one article. The introduction of a CBDC aims to counter the increasing popularity of cryptocurrencies and provide a secure alternative for Tanzanian citizens. This move aligns with a global trend among central banks exploring the potential benefits of CBDCs in terms of financial inclusion, efficiency, and security.

Zanzibar, a semi-autonomous territory in Tanzania, is exploring the regulation and adoption of cryptocurrencies like Bitcoin, as highlighted in another article. The government plans to engage stakeholders in discussions on cryptocurrency-related policies. This development follows President Samia Suluhu Hassan’s call for the exploration of cryptocurrencies by the central bank. The article suggests the potential for more countries to follow El Salvador’s example of adopting Bitcoin as legal tender or using cryptocurrencies for transactions.

The Bank of Tanzania has issued warnings to the public against engaging in activities involving virtual currencies, as outlined in another article. The bank emphasizes that virtual currencies lack legal authorization in the country, and involvement in such activities may have legal consequences. This article underscores the concerns of central banks worldwide regarding the risks associated with cryptocurrencies, including money laundering, fraud, and potential disruptions to the financial system.

In response to the global rise of cryptocurrencies, the Bank of Tanzania is considering the launch of its own central bank digital currency (CBDC), according to another article. The bank is conducting research to assess the risks and benefits of CBDCs. The article highlights the growing trend among central banks to explore CBDCs’ potential advantages, such as enhanced financial inclusion, reduced transaction costs, and improved efficiency.

Another article discusses the government of Tanzania’s plans to develop a central bank digital currency (CBDC) to enhance financial inclusion and improve monetary policy efficiency. The benefits of CBDCs, such as increased financial inclusion and lower transaction costs, are highlighted. However, the article also acknowledges the challenges and risks associated with CBDCs, such as privacy concerns and potential impacts on the traditional banking system.

Lastly, an article focuses on the government of Zanzibar considering the adoption of cryptocurrencies like Bitcoin. It highlights the potential benefits, such as cross-border money transfers and improved financial market infrastructure. However, the article emphasizes the need for clear regulations and policies to address the risks associated with cryptocurrencies, including illegal activities and cybersecurity threats.

Emerging Trends & Themes

Across the articles, several recurring trends and themes can be observed:

Shifting Attitudes: There is a noticeable shift in attitude towards cryptocurrencies in Tanzania, with President Samia Suluhu Hassan calling for the exploration of cryptocurrencies and the development of a regulatory framework. This reflects a broader global trend of governments and central banks recognizing the potential benefits of cryptocurrencies and exploring their adoption.
Central Bank Digital Currencies (CBDCs): The development of CBDCs is a growing trend globally, with many central banks exploring their potential benefits in terms of financial inclusion, reduced transaction costs, and improved efficiency. Tanzania is following this trend by considering the launch of its own CBDC. CBDCs offer a secure and regulated alternative to cryptocurrencies, addressing concerns around volatility and lack of regulation.
Regulatory Challenges: The lack of specific regulations and legislation governing cryptocurrencies in Tanzania poses challenges for the government and regulators. The ban on cryptocurrencies has not been entirely effective, as evidenced by the significant cryptocurrency mining sector in the country. There is a need for comprehensive regulations to govern the use of cryptocurrencies and address the risks associated with them.
Financial Inclusion: The potential for cryptocurrencies and CBDCs to enhance financial inclusion is a recurring theme. Many African countries, including Tanzania, have a significant portion of the population without access to traditional banking services. CBDCs can provide a digital payment infrastructure that is accessible to all, bridging the gap and bringing more individuals into the formal financial system.

Forecasts for the Crypto Regulatory Future

The discussed news items have the potential to impact the regulatory environment for blockchain and cryptocurrency in Tanzania. The shift in attitude towards cryptocurrencies, as evidenced by President Samia Suluhu Hassan’s call for exploration and the development of a regulatory framework, suggests a potential reversal of the ban on cryptocurrencies. This could lead to the introduction of specific regulations and legislation governing the use of cryptocurrencies in the country.

The development of a central bank digital currency (CBDC) by the Bank of Tanzania also indicates a recognition of the potential benefits of digital currencies. The introduction of a CBDC could provide a safe and regulated alternative to cryptocurrencies, addressing concerns around volatility and lack of regulation. However, the implementation of a CBDC will require careful consideration of the risks and challenges associated with digital currencies, such as privacy, security, and the potential impact on the traditional banking system.

The regulatory challenges and opportunities that may arise in relation to cryptocurrency, decentralized finance, and blockchain technology in Tanzania include:

Developing Comprehensive Regulations: Tanzania needs to develop comprehensive regulations and legislation governing the use of cryptocurrencies, decentralized finance, and blockchain technology. This will provide clarity and legal certainty for businesses and individuals operating in the space and help address the risks associated with these emerging technologies.
Promoting Financial Inclusion: The introduction of a central bank digital currency (CBDC) has the potential to enhance financial inclusion in Tanzania by providing a digital payment infrastructure that is accessible to all. This will require collaboration between the government, regulators, and financial institutions to ensure the widespread adoption and usage of the CBDC.
Addressing Risks and Challenges: The adoption of cryptocurrencies and blockchain technology poses risks and challenges, including money laundering, fraud, and cybersecurity threats. The government and regulators need to develop robust frameworks to address these risks and protect consumers engaging with cryptocurrencies and blockchain businesses.
Fostering Innovation and Collaboration: The government should provide incentives and support for blockchain and cryptocurrency startups or projects. This will encourage innovation and collaboration in the space, driving economic growth and positioning Tanzania as a hub for blockchain and cryptocurrency development in Africa.
Enhancing Financial Infrastructure: The government should ensure that the country’s banking system supports Web3 businesses. This includes allowing these businesses to open bank accounts, perform transactions, and operate within the existing financial infrastructure. Clear and favorable tax guidelines should also be established to support the growth of these businesses.
Balancing Regulation and Innovation: The government should strike a balance between regulation and innovation in the blockchain and cryptocurrency space. While regulations are necessary to protect consumers and maintain financial stability, overly burdensome regulations can stifle innovation and hinder the growth of the industry. The government should work closely with industry stakeholders to develop regulations that foster innovation while addressing risks and protecting consumers.

In conclusion, Tanzania is in the process of developing its stance on the use of cryptocurrencies, decentralized finance, and blockchain technology. The shift in attitude towards cryptocurrencies and the exploration of a central bank digital currency (CBDC) indicate a potential reversal of the ban on cryptocurrencies and the introduction of specific regulations and legislation governing their use. The adoption of CBDCs and the development of comprehensive regulations will have implications for financial inclusion, financial infrastructure, and innovation in Tanzania. The government should strike a balance between regulation and innovation to foster the growth of the blockchain and cryptocurrency industry while addressing risks and protecting consumers.

About the Author

Robby Greenfield has over a decade of experience in blockchain and financial engineering. He has served as an industry leader in deploying decentralized applications in emerging markets, such as Sub-Saharan Africa, the Asia Pacific, and LATAM. Robby has worked with renowned blockchain firm ConsenSys, co-deploying innovative solutions and collaborating with organizations like the U.S. State Department, the World Bank, the UNOPS, Oxfam International, and Care International. Currently, he is the CEO of Umoja Labs, a Coinbase and Mercy Corps-backed Web3 fintech providing payments and credit infrastructure across Sub-Saharan Africa.