Tanzania has a major opportunity to benefit from cryptocurrency, but it must act quickly to replace its outdated ban with clear and modern regulations, says a leading economist.
Dr. Bravious Kahyoza, a lecturer at Kampala International University’s Dar es Salaam campus, told us in an exclusive interview that although Tanzania banned crypto trading in 2019, the country is still one of about 20 African nations heavily involved in cryptocurrency trading.
An online source noted that Tanzania is not among the top 20 countries globally in crypto trading. Compared to nations like India and the United States, or others with crypto-friendly rules, Tanzania’s crypto market is still small.
However, reports show many Tanzanians trade and own cryptocurrencies. One study by Triple A estimates about 2.3 million Tanzanians hold crypto deposits.
The Bank of Tanzania is reportedly exploring the idea of a central bank digital currency (CBDC). Some experts are skeptical because the central bank does not operate independently, which might limit trust in a government-backed digital currency.
Officials in the monetary sector agree that Tanzania needs clear rules for cryptocurrencies. This would help fight fraud, tax evasion, and reduce risks to the formal financial system.
Courts are already facing cases involving crypto transactions. Without specific laws, judges find it difficult to enforce contracts linked to virtual currencies.
Dr. Kahyoza said crypto trading is happening regardless of the ban, so it is time for Tanzania to regulate rather than forbid it. He stressed that cryptocurrencies should be treated as assets, separate from legal money. This would allow safe, regulated trading while protecting the national currency.
He suggested introducing a 3 percent withholding tax on crypto transactions to generate government revenue. “With smart regulations, Tanzania can unlock big economic benefits,” he said, pointing to successful examples in the region.
He highlighted Kenya’s fintech regulatory sandbox and South Africa’s phased licensing for crypto service providers as good models for Tanzania to follow.
Dr. Kahyoza explained that reforming Section 15 of the National Payments System Act is critical. This section limits licensing of digital platforms, blocking proper regulation of crypto exchanges.
Updating these laws is necessary for better local oversight and to meet global anti-money laundering (AML) standards set by the Financial Action Task Force (FATF), an organization under the G-7.
Following these international rules will help stop illegal financial flows and protect Tanzania’s financial reputation, he said. He also supports the idea of launching a Central Bank Digital Currency, similar to Nigeria’s eNaira.
He noted that Nigeria’s digital currency helped boost digital transactions by 20 percent and attracted nearly $1 billion in investments each year.
“A CBDC could improve financial inclusion and modernize Tanzania’s payment system,” he said, while warning about the risks of unregulated crypto markets. In 2022, crypto scams cost Africa $3.7 billion, exposing Tanzanians to big risks without strong rules.
Dr. Kahyoza emphasized the need for Know Your Customer (KYC) and AML rules, licensing of crypto exchanges, and public education campaigns to protect users.
A combined approach is essential to safeguard consumers and the financial system. Properly managed, crypto could also increase foreign investment in Tanzania.
He pointed to Kenya’s $1.5 billion peer-to-peer crypto trades in 2021 as an example. “With the right regulations and awareness, Tanzania can reach or exceed that level without threatening its $5.6 billion foreign reserves,” he said.
He added that Tanzania must collaborate with East African Community neighbors under the 2024 digital finance plan. The country should also align with the 134 nations following IMF and FATF crypto frameworks.
This regional and international cooperation is key, he said, because modern finance is interconnected and requires a unified approach to crypto governance.
Dr. Kahyoza concluded that Tanzania needs a clear plan to responsibly embrace digital currencies. Doing so would turn the current lack of regulations into a strategic economic advantage.
