Legal Crypto In Madagascar

Cryptocurrency in Madagascar: Legislation and Trends

Cryptocurrencies such as Bitcoin and Ethereum are increasingly drawing interest in Madagascar, the fourth largest island in the world, located in the Indian Ocean, and one of the poorest countries in Africa. The country’s first over-the-counter (OTC) crypto trading platform was launched in May 2018.

Cryptocurrencies have revolutionized financial systems worldwide, but their implementation and regulation differ greatly from country to country. This document discusses the legal status of cryptocurrency in Madagascar, the regulatory environment, exchanges, wallets, DeFi DApps, NFTs, and how to buy Bitcoin, as well as Bitcoin trading and the best crypto exchanges for trading.

Cryptocurrency Laws and Regulations in Madagascar

There is no dedicated regulation for the crypto sector in Madagascar, creating a legal gray area. The Central Bank of Madagascar (Banky Foiben’i Madagasikara, BFM) has not recognized cryptocurrencies as legal tender; the official currency is the Malagasy ariary. Unlike countries such as Algeria, where crypto is outright banned, Madagascar has not prohibited its use, and it occurs indirectly and unofficially.

The BFM has raised concerns about risks from cryptocurrencies, including volatility, fraud, and potential use in illicit activities, but it has not banned them. This cautious stance reflects Madagascar’s limited institutional capacity to regulate new technologies. The lack of legislation leads to unmonitored crypto transactions, posing risks to users while providing freedom to early adopters.

Legislation and Regulation of the Market

Madagascar’s financial system is governed by laws targeting traditional banks and anti-money laundering (AML) activities, with no crypto-specific regulations. Key legislation includes:

• Banking Law (1996): Governs financial institutions but does not cover digital assets.
• Anti-Money Laundering Law (2004): Mandates AML and counter-terrorism financing (CFT) compliance, which may apply to suspicious crypto transactions.
• Foreign Exchange Regulations: Covers currency transactions but does not address cryptocurrencies.

The BFM oversees monetary policy and financial stability but has not yet developed a digital asset framework. Proceeds from crypto activities, such as trading and mining, are subject to general income tax laws, though enforcement is lax due to limited tax infrastructure. This regulatory gap aligns with many African countries, where only 52.1% have legal crypto markets. Madagascar’s membership in the Southern African Development Community (SADC) may influence future regulations, though no regional crypto laws currently exist.

Most Popular Exchanges

Cryptocurrency in Madagascar is primarily limited to peer-to-peer (P2P) trading and foreign exchanges. Popular platforms among Malagasy traders include Binance, Paxful, and Luno, valued for their low fees and user-friendly interfaces. Paxful is particularly popular for P2P trading, enabling transactions through mobile money services like Orange Money, a common gateway in Madagascar.

P2P trading dominates due to Madagascar’s cash-based economy and low banking penetration rate, with only an estimated 15% of adults holding a bank account. Centralized exchanges are more accessible than decentralized ones like Uniswap, and there are no crypto ATMs. Without regulation, users face risks such as scams and disputes on open platforms.

The DeFi and NFT Landscape in Madagascar

Madagascar’s DeFi market is nascent, constrained by technological and economic limitations. DeFi projects like Aave or Compound, which support decentralized lending and trading, require stable internet and technical expertise, both scarce in Madagascar, where internet penetration is around 10%. Most crypto activity focuses on basic trading, with minimal engagement in DeFi protocols. Regulatory uncertainty further hinders adoption by lacking legal protections for users.

The NFT market is equally underdeveloped. Global platforms like OpenSea are accessible, but high transaction costs (e.g., Ethereum gas fees), limited awareness, and slow networks deter participation. Local creators and collectors are rare, and the concept of digital ownership struggles to gain traction in a country prioritizing economic survival. Infrastructure challenges and low digital literacy keep Madagascar’s NFT market small compared to regions with active NFT ecosystems.

Useful Information

• Crypto in Grey Markets: In Antananarivo, small vendors use crypto to pay overseas suppliers, avoiding high traditional banking fees.
• Blockchain for Agriculture: Pilot projects use blockchain to track vanilla exports, a key Malagasy commodity.
• Community Networks: Malagasy traders connect via WhatsApp-based crypto groups to share market tips.
• Security Practices: Local users are advised to use multi-signature wallets to enhance protection for crypto assets.

Key Data

Subtopic	Details
Economic Potential	Crypto could boost export revenues by 2-4% for small businesses if supported.
Blockchain Initiatives	Trials test blockchain for transparent fishery supply chains.
Social Media Engagement	15% of urban crypto users learn through Telegram groups.
Connectivity Constraints	Only 30% of urban areas have reliable 3G access, limiting crypto apps.

Conclusion

In Madagascar, cryptocurrency operates in a legal limbo, neither explicitly permitted nor prohibited. The Central Bank of Madagascar adopts a cautious approach, allowing limited use without oversight, which introduces risks. DeFi and NFT markets lag due to technological and economic barriers. As global and regional crypto adoption grows, Madagascar may face pressure to enact regulations, potentially aligning with SADC models. For now, users must prioritize security in this unregulated environment. Cryptocurrencies hold potential to enhance financial inclusion and support Madagascar’s export-oriented economy, particularly in sectors like vanilla and fishing. Promoting digital literacy and improving infrastructure could enable Madagascar to leverage blockchain technologies for economic stability and reduced risks in informal markets.