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Morocco's Shift from Cryptocurrency Ban to Regulation

Morocco's Shift from Cryptocurrency Ban to Regulation
Monday 16 December 2024 - 15:33
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In 2017, Morocco implemented a ban on cryptocurrencies, a measure that did not prevent underground trading within the country. However, the national financial regulators have now acknowledged the necessity of transitioning from prohibition to regulation. This shift has been supported by major economic players, including Bank Al-Maghrib, the Ministry of Finance, and the Moroccan Capital Markets Authority (AMMC).

In its 2023 annual report, AMMC’s president, Nezha Hayat, presented new insights into the previously announced bill concerning "digital assets." This bill is aimed at establishing a regulatory framework for digital assets in Morocco, driven by three primary objectives.

The first objective is to ensure compliance with international standards, including recommendations from the International Organization of Securities Commissions (IOSCO) regarding the regulation of digital asset service providers and the Financial Stability Board’s recommendations on market risks, such as money laundering and terrorism financing linked to digital asset use.

The second goal focuses on fostering innovation and growth within the financial technology ecosystem. The proposed regulatory framework is intended to align with relevant European standards, particularly the European regulation on crypto-assets markets, ensuring harmonization with European regulatory texts.

The third goal underscores the importance of developing a clear legal structure for digital asset markets. This includes regulating primary and secondary markets, digital asset service providers, trading platforms, and the tokens themselves. The bill also covers market participants such as service providers, token issuers, and those requesting the listing of crypto-assets on trading platforms.

The proposed legislation seeks to ensure the regulation of digital asset services, establish service provision methods, protect clients and crypto-asset holders, and create a system to prevent violations in digital asset markets while holding offenders accountable.

A diagnostic study on financial technologies in Morocco was also conducted with the help of an external consulting firm. This study will serve as the foundation for creating a national strategy to support and develop financial technologies in the country.

The Commission is committed to maintaining continuous regulatory oversight, particularly concerning digital assets, while identifying and managing risks associated with these new technologies to protect investors and safeguard financial stability.

As part of the financial technologies working group, AMMC has actively participated in virtual meetings organized by the group. Following these discussions, the International Organization of Securities Commissions released a report in November 2023 with recommendations for digital asset and crypto-asset markets. The goal is to ensure regulatory consistency and address concerns about market integrity and investor protection arising from activities related to digital assets.

These recommendations cover six key areas: conflicts of interest from the vertical integration of activities, market manipulation, breaches related to insider trading and fraud, safeguarding clients' assets, cross-border risks and regulatory cooperation, operational and technological risks, and retail distribution.

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