Crypto-assets: How Morocco Aims to End the Regulatory "No Man's Land"

The new regulatory framework for crypto-assets in Morocco is the result of collaborative efforts between the Ministry of Economy and Finance, Bank Al-Maghrib, the Moroccan Capital Market Authority (AMMC), and the Financial Intelligence Processing Unit (UTRF). Supported by the World Bank, the legislation aligns with international best practices, including the European MiCA regulation and recommendations from FATF, FSB, and IMF. During the 9th Global Conference on Criminal Finance and Crypto-assets, co-hosted by Europol and the Basel Institute on Governance and held at the UN in Vienna, Nabil Badr, Deputy Director of Banking Supervision at Bank Al-Maghrib, discussed Morocco's transition from caution to action. He noted the growing interest in crypto-assets since 2017, particularly among certain demographics. Badr emphasized the need for regulators to address two key questions: how to protect the financial system from money laundering and terrorism financing risks, and how to safeguard consumer rights in the absence of a governing authority. This reflection led to the establishment of a legal framework designed not to stifle innovation but to better channel an already significant phenomenon. According to Chainalysis estimates, Morocco ranks among the top 25 countries globally in crypto-asset usage and is the leading country in North Africa. The proposed law features a dual regulatory architecture. The AMMC will oversee the issuance, public offerings, and trading of crypto-assets, while Bank Al-Maghrib will supervise issuers of asset-backed tokens, including stablecoins. This division of responsibilities aims to prevent overlaps and ensure appropriate supervision tailored to the nature of each product. Badr stated, "We have taken international standards and adapted them to our context." A Committee for Coordination and Monitoring of Systemic Risks will be established to track interconnections between the crypto market and the traditional financial system. Additionally, a Professional Association of Service Providers will serve as an interface between industry players and authorities. The legislation also provides clear definitions of crypto-assets, distinguishing utility tokens from asset-backed tokens. Utility tokens will grant access to services or products, while stablecoins will be strictly reserved for banks and payment institutions under the direct oversight of Bank Al-Maghrib. Badr explained, "We consider stablecoins to be similar to deposits. Therefore, their issuance must come from regulated financial institutions." This provision aims to prevent competition between crypto-assets and digital payment methods promoted by the Kingdom, particularly within the framework of its financial inclusion strategy. However, the project excludes NFTs, decentralized finance (DeFi), mining, and central bank digital currencies (CBDCs), which are deemed too experimental. It also clarifies that crypto-assets do not constitute legal means of payment. The core of the framework relies on the mandatory licensing of crypto-asset service providers (EPSC). These entities must have a physical presence in Morocco, sufficient capital, an internal control system, and experienced management. Applications will be processed by the AMMC within a maximum of 120 days, with the possibility of restricting or revoking licenses in cases of non-compliance. According to Badr Bellaj, co-founder of Mchain, "This represents a major step towards creating a credible Moroccan crypto ecosystem based on transparency and trust." He also praised the establishment of a predictable environment for entrepreneurs, stating, "This legislation grants legal status to industry players, allowing them to operate transparently. This is essential for attracting talent and investors." He added, "We have been waiting for years for clarification. Now, those building blockchain solutions can work with banks and regulators instead of circumventing them. This marks a profound cultural shift in the economy." Badr noted that while the AMMC's oversight provides clarity, it is crucial not to overly burden procedures to avoid hindering smaller entities. The challenge will be to balance rigor with flexibility. On the anti-money laundering front, the bill introduces the Travel Rule for the first time in Morocco, requiring service providers to identify the sender and recipient of each crypto-asset transfer. Participants must retain data for ten years, report suspicious transactions, and cooperate with the UTRF and their foreign counterparts. The legislation also implements a comprehensive market abuse prevention regime, addressing issues such as price manipulation, insider trading, and the dissemination of misleading information. Sanctions range from license revocation to financial penalties and criminal charges for the most serious offenses. Badr emphasized, "Crypto is inherently borderless, which poses a challenge for all supervisors. It is essential to integrate AML requirements from the outset of the framework." Badr Bellaj added, "Regulation is not the enemy of innovation. It allows virtuous actors to stand out. If we want to build a solid ecosystem, we must embrace a culture of compliance and control." Beyond technical aspects, the legislation carries a cultural ambition to change perceptions of crypto-assets. Long viewed as speculative tools or risks, they are now seen as a lever for modernization. Bellaj stated, "This bill implicitly recognizes the Moroccan digital economy. It opens a regulated space where innovation and compliance can coexist. Most importantly, it allows Morocco to regain control over an activity that was developing outside any framework." He continued, "This is a pivotal moment. If the implementing texts move in the right direction, Morocco could become an African laboratory for crypto regulation." Morocco is thus drawing a middle line between openness and control, without succumbing to blind enthusiasm. Crypto-assets will now have a place, but within a strict, transparent framework aligned with global standards. The 18-month transitional period outlined in the legislation will allow existing players to comply. During this time, implementing decrees will specify capital thresholds, reporting obligations, and cooperation modalities between BAM and the AMMC. For both Nabil Badr and Badr Bellaj, this law marks a significant advancement for a country embracing digital transformation while preserving its financial sovereignty. Morocco is not copying; it is adapting. The "Moroccan MiCA" aims to be pragmatic and sovereign, adhering to a simple philosophy: regulate to protect, innovate to advance.