CENTRAL BANK OF DJIBOUTI

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CIRCULAR NO. 2025-01

GOVERNING THE REGIME FOR VIRTUAL ASSET SERVICE PROVIDERS ON THE TERRITORY OF THE REPUBLIC OF DJIBOUTI

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The Governor of the Central Bank of Djibouti,

Having regard to Law No. 118/AN/11/6ème L amending the statutes of the Central Bank of Djibouti,

Having regard to Law No. 119/AN/11/6ème L on the establishment and supervision of credit institutions and financial auxiliaries,

Having regard to Law No. 116/AN/11/6ème L on the establishment of Islamic banks in Djibouti,

Having regard to Law No. 179/AN/07/5ème L regulating microfinance activities on the Territory of the Republic of Djibouti,

Having regard to Law No. 118/AN/15/5ème L establishing a national payment system, its regulation and supervision,

Having regard to Law No. 104/AN/24/9ème L amending Law No. 110/AN/11/6ème L on combating the financing of terrorism,

Having regard to Law No. 105/AN/24/9ème L amending Law No. 111/AN/11/6ème L on combating terrorism and other serious offenses,

Having regard to Law No. 178 amending Law No. 106/AN/24/9ème L on combating money laundering, terrorist financing and the proliferation of weapons of mass destruction,

Having regard to Decree No. 2023-247/PRE, appointing the Governor of the Central Bank of Djibouti,

Having regard to Decree No. 2024-052/PR/MJAFM attributing, organizing and functioning of the National Financial Intelligence Agency,

Having regard to Decree No. 2024-053/PR/MJAFM establishing the implementation regime for targeted financial sanctions related to terrorist financing and the proliferation of weapons of mass destruction;

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Having regard to Order No. 2024-113/PRE/2024 establishing the Technical Committee for the implementation and management of Targeted Financial Sanctions related to Terrorism and the Proliferation of Weapons of Mass Destruction;

Having regard to Instruction No. 2019-05 of the Central Bank of Djibouti on corporate governance of credit institutions,

Having regard to Instruction No. 2025-01 of the Central Bank of Djibouti on the anti-money laundering and counter-terrorist financing prevention framework,

Having regard to Circular No. 2012-02 setting out the application procedures for credit institution approval.

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Orders:

PRELIMINARY CHAPTER: DEFINITIONS

For the purposes of this chapter, the following terms are understood as:

Virtual asset or cryptoasset, a digital representation of value that can be exchanged digitally, or transferred, and which can be used for payment or investment purposes. Virtual assets do not include digital representations of fiat currencies, securities and other financial assets. Cryptoassets constitute digital representations of values or rights recognized by cryptoasset market participants, stored electronically via blockchain technology. Value representations include the external, non-intrinsic value attributed to a cryptoasset by the relevant parties or market participants, meaning that the value is subjective and based solely on the interest of the buyer and holders of the cryptoasset.

Digital assets that cannot be transferred to other holders do not fall under the definition of cryptoassets. Thus, digital assets that are only accepted by the issuer or provider and are technically impossible to transfer directly to other holders are excluded from the scope of this regulation. Such digital assets include, for example, loyalty programs in which loyalty points can only be exchanged for benefits with the issuer or provider of those points.

Tokens, or token in the cryptoasset universe, a non-duplicable digital asset issued and exchangeable on a blockchain network.

Beneficial owner (indirect shareholder), the natural person(s) who ultimately own or control a client and/or the natural person on whose behalf an operation is performed. Also included are natural persons who ultimately exercise effective control over a legal entity or legal structure. Only one natural person can be the ultimate beneficial owner, and more than one natural person can be the ultimate beneficial owner of a given legal entity or legal structure.

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Virtual Asset Service Provider (VASP), any legal person that commercially exercises one or more of the following activities or operations on behalf of a client or for its own account:

• exchange between virtual assets and fiat currency,
• exchange between one or more forms of virtual assets,
• transfer of virtual assets,
• custody and/or administration of virtual assets or instruments enabling control over virtual assets, and
• participation in and provision of financial services related to the offer by an issuer and/or the sale of virtual assets.

White paper, a guide intended to present the public with concise information on virtual assets and their management. It aims to facilitate or guide the reader's decision-making on the subject, and is used at both institutional and commercial levels.

Electronic money, a monetary value representing a claim on the issuing institution and which is:

• Stored electronically, including magnetically;
• Issued without delay against the receipt of funds in an amount not less than the issued monetary value;
• And accepted as a means of payment by natural persons other than the issuing institution.

Electronic Money Issuer (EMI), any legal person, other than credit institutions, authorized to issue electronic money payment instruments and whose activities are limited to:

• The issuance of electronic money;
• The distribution of electronic money.

Electronic Money Issuers do not fall under this circular. Indeed, holders benefit from a claim on the electronic money issuer and have the contractual right to request reimbursement at any time and at nominal value of the monetary value of the held electronic money, so that they do not fall under the definition of cryptoassets and are subject to separate regulation.

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CHAPTER I. EXERCISE OF VASP ACTIVITIES ON THE TERRITORY

OF THE REPUBLIC OF DJIBOUTI

Article 1: Object

This circular aims to set out the conditions for exercising the activity of virtual asset service provider, also referred to as Virtual Asset Service Provider (VASP), on the territory of the Republic of Djibouti.

The provisions of this circular apply to institutions offering investment, transmission or sales services on cryptoassets, including the operation of cryptoasset trading platforms, the exchange of cryptoassets against fiat currency or other cryptoassets counterparty values, as well as the custody and administration of cryptoassets on behalf of clients or other interested third parties.

Article 2: Scope

This regulation applies to all companies exercising activities of issuance, public offering and admission to trading of cryptoassets or providing services related to cryptoassets on the territory of the Republic of Djibouti. Services related to cryptoassets include:

a) custody and administration of cryptoassets on behalf of clients, b) operation of a cryptoasset trading platform, c) exchange of cryptoassets against their fiat currency counterparty value, d) exchange of cryptoassets against other cryptoassets, e) execution of orders on cryptoassets on behalf of clients, f) placement of cryptoassets, g) reception and transmission of orders on cryptoassets on behalf of clients, h) provision of advice on cryptoassets, i) provision of portfolio management services for cryptoassets, j) provision of transfer services for cryptoassets on behalf of clients.

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CHAPTER II. CONDITIONS FOR GRANTING THE LICENSE OR AUTHORIZATION

TO EXERCISE VASP ACTIVITIES

Article 3: Conditions for exercising VASP activity

Access to the status of VASP is open only to legal persons, constituted in the form provided for in paragraph a) of this article, which have established and obtained approval from their shareholders and corporate bodies, then submitted to the Central Bank of Djibouti for approval in application of art. 7 of this regulation, a set of documents and procedures regarding their cryptoasset activity comprising:

a) information on the legal person planning to exercise the activity:

• Legal form of the institution, specifying that only the forms of Joint Stock Company, Simplified Joint Stock Company and Limited Liability Company are admitted, excluding Single-Person Limited Liability Enterprises;
• Amount and distribution of capital;
• Identity and quality of capital contributors, as well as their guarantors where applicable;
• Proof, by all means, including a criminal record extract, that responsible managers, members of the supervisory body or capital contributors holding more than 10% of the capital have not been subject to a final conviction, pronounced by a court in Djibouti or a foreign jurisdiction, for crime, forgery and use of forgery, theft, fraud, breach of trust, bankruptcy and fraudulent insolvency, extortion of funds or securities, misappropriation of public funds, as well as for any attempt or complicity in the offenses listed above.

b) information on the issuer(s) of cryptoassets offered as part of the activity, when they differ from the provider or the person applying for VASP status;

c) information on the cryptoasset project;

d) information on the public offering of cryptoassets;

e) information on the concerned cryptoassets;

f) information on the rights and obligations attached to the cryptoassets;

g) information on the underlying technology;

h) information on the risks incurred and their coverage or non-coverage;

i) information on the anti-money laundering and counter-terrorist financing framework, in accordance with art. 12 of this regulation.

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All the information listed above must be fair, clear and not misleading, and presented in a concise and understandable form, specifying that they will serve as the basis for the white paper that the VASP must make available to its clients in accordance with the following article.

Article 4: White paper

VASPs must provide their clients, against receipt, a detailed white paper outlining all useful information on the nature of the services offered and the associated risks. This white paper must contain all the information stated in paragraphs b, c, d, e, f, g and h of article 3 of this regulation.

The cryptoasset white paper contains a clear and unambiguous declaration that:

a) cryptoassets may lose all or part of their value; b) cryptoassets are not always transferable; c) cryptoassets may be illiquid; d) cryptoassets are not subject to supervision or prudential controls carried out by the Central Bank of Djibouti, and are not covered by any compensation or guarantee system in place on the territory of the Republic of Djibouti.

Article 5: Commercial communications

All commercial communications relating to a public offer of cryptoasset services are notified, upon request, to the Central Bank of Djibouti. These commercial communications, regardless of their distribution channel (prospectus, press, media, internet or others) must comply with all of the following requirements:

a) commercial communications are clearly identifiable as such, b) the information contained in the commercial communications is fair, clear and not misleading, c) the information contained in the commercial communications corresponds to the information contained in the cryptoasset white paper as required of each VASP under article 4, d) commercial communications clearly indicate that a cryptoasset white paper has been published and clearly mention the VASP's website address, as well as a telephone number and email address to contact this entity, e) commercial communications contain the following clear and prominent declaration:

« The present commercial communication has neither been examined nor approved by a competent authority of the Republic of Djibouti. The provider of cryptoasset services is solely responsible for the content of this commercial communication. »

Article 6: Modification of white papers and commercial communications

VASPs modify their cryptoasset white paper and, where applicable, their published commercial communications, whenever there is a new significant fact, a substantial error or a substantial inaccuracy that may affect the assessment of cryptoassets or associated risks. This requirement applies as long as cryptoasset services are offered to the public.

VASPs notify the Central Bank of Djibouti of their modified cryptoasset white paper and, where applicable, their modified commercial communications and the planned publication date, indicating the reasons for this modification, at least seven working days before their publication.

Article 7: Approval applications

Legal persons planning to offer cryptoasset services to the public submit their application to the Central Bank of Djibouti for the approval referred to in article 3 of this regulation.

The application referred to in paragraph 1 contains all of the following information:

a) the address of the candidate VASP, b) the legal entity identifier of the candidate VASP, c) the statutes of the candidate VASP, d) an activity program outlining the business model that the candidate VASP intends to follow and comprising a business plan, an income statement and a projected balance sheet over a horizon of at least two years, e) a legal opinion stating that the proposed activities duly refer to the cryptoassets covered by this regulation and do not meet the qualification of other types of assets, such as electronic money tokens, covered by other regulations, f) a detailed description of the governance framework of the candidate VASP, g) when there are cooperation agreements with other VASPs, including those established outside the Republic of Djibouti, a description of their internal control mechanisms and procedures aimed at ensuring compliance with anti-money laundering and counter-terrorist financing obligations under laws 104, 105 and 178 of the Republic of Djibouti, h) the identity of the members of the management body of the candidate VASP,

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i) proof that the persons mentioned in point h) enjoy sufficient integrity and possess adequate knowledge, skills and experience to direct a VASP, j) proof that any shareholder or partner, direct or indirect, holding a qualifying participation in the candidate VASP enjoys sufficient integrity, k) the cryptoasset white paper as described in this regulation, l) a description of contractual agreements with third-party entities, if any, m) a description of the candidate VASP's business continuity policy, n) a description of internal control mechanisms, including a risk map comprising, among others, cybersecurity risk, and procedures for managing these risks, o) a description of the systems and procedures put in place to ensure data availability, authenticity, integrity and confidentiality, p) a description of the candidate VASP's complaint handling procedures, including in particular the exercise of the right of withdrawal provided for in art. 9 of this regulation.

CHAPTER III. OPERATION OF VASPs

Article 8: Governance framework

VASPs must have a solid governance framework, including in particular a clear organizational structure with well-defined, transparent and coherent division of responsibilities, effective procedures for detecting, managing, monitoring and reporting on the risks to which they are or may be exposed, and adequate internal control mechanisms, including sound administrative and accounting procedures.

The members of the management body of VASPs must enjoy sufficient integrity and possess adequate knowledge, skills and experience, both individually and collectively, to exercise their functions. In particular, they have not been convicted of offenses related to money laundering or terrorist financing, or for any other offense that would impair their integrity. They must also demonstrate that they are able to devote sufficient time to the effective exercise of their functions.

The management body of VASPs evaluates and periodically reviews the effectiveness of the strategic devices and procedures put in place and takes appropriate measures to remedy any deficiencies in this regard.

Shareholders or partners, direct or indirect, holding qualifying participations in VASPs must enjoy sufficient integrity and, in particular, must not have been convicted of offenses related to money laundering or terrorist financing, or for any other offense that would impair their integrity.

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VASPs adopt policies and procedures sufficiently effective to guarantee the rights of clients using their services. In particular, they must ensure the following functions:

a) the mechanism for issuing and redeeming cryptoassets on which they offer services, b) validation protocols for transactions involving cryptoassets on which they offer services, c) the functioning of the underlying technology for cryptoassets on which they offer services, d) mechanisms to ensure the liquidity of cryptoassets on which they offer services, e) agreements concluded with third-party entities for the operation, investment, custody of reserve assets and, where applicable, public distribution of cryptoassets on which they offer services.

VASPs establish a business continuity policy and plans to ensure, in the event of interruption of their communication, IT and technology systems and procedures, the safeguarding of their essential data and functions and the continuation of their activities or, when this is not possible, the rapid recovery of these data and functions and the swift resumption of their activities.

VASPs must have adequate systems and procedures to ensure data availability, authenticity, integrity and confidentiality. These systems record and safeguard relevant data and information collected and produced as part of VASP activities.

VASPs ensure that they are regularly subject to audit by independent auditors. The results of these audits are communicated to the management body of the relevant issuer and made available to the Central Bank of Djibouti.

Article 9: Right of withdrawal

Client natural persons or legal persons, who are not themselves financial sector professionals or cryptoasset activity professionals, and who purchase or trade cryptoassets through an approved VASP in application of this regulation by the Central Bank of Djibouti to exercise its activity on the territory of the Republic of Djibouti, have a right of withdrawal.

Non-professional clients enjoy a 14 calendar day period to withdraw from their cryptoasset purchase agreement, other than tokens referring to one or more assets and electronic money tokens, without bearing any fees or costs and without having to give a reason. The withdrawal period begins to run from the day the non-professional client gives their agreement to purchase these cryptoassets.

All payments received from a non-professional client, including, where applicable, all charges, are refunded without unjustified delay and in any event at the latest 14 days from the date on which the VASP placing cryptoassets is informed of the non-professional client's decision to withdraw from the purchase agreement for these cryptoassets.

This refund is made by the same payment method used by the non-professional client for the initial transaction, unless otherwise expressly agreed by the non-professional client and provided that the refund does not incur any fees or costs for the non-professional client.

VASPs provide information on the right of withdrawal referred to in this article in their cryptoasset white paper. They specify that the exercise of this right is, where applicable, subject to the civil law rules applicable in Djibouti and subject to the discretion of the courts under common law conditions, without intervention of financial sector supervisory authorities and notably the Central Bank of Djibouti.

Article 10: Capital requirement

VASPs must at all times have capital of an amount allowing in particular to ensure a minimum reimbursement to clients under the right of withdrawal provided for in art. 9 of this regulation. These capital requirements are at least equal to the highest of the following amounts:

a) 100 million DJF, b) 2% of investments received during the previous year, or for VASPs commencing their activity 2% of investments envisaged in the projected accounts mentioned in art. 7, c) one quarter of fixed overhead expenses of the previous year, or for VASPs commencing their activity one quarter of fixed overhead expenses envisaged in the projected accounts mentioned in art. 7.

This capital must be fully paid up from the commencement of the VASP's activity. It consists of subscribed share capital in cash and, once the VASP's operations have begun, accumulated and undistributed profits certified by statutory auditors.

Article 11: Security of funds

To ensure their security, the capital of VASPs is held in an account opened on the books of the Central Bank of Djibouti.

In the same manner, funds received from clients in settlement of a cryptoasset investment are held in an escrow account opened on the books of a bank established in Djibouti, pending their utiliz