The National Bank of Ethiopia has reaffirmed a broad, prohibition-first
stance on virtual assets. Here is what the Notice covers, how it fits within
Ethiopia’s wider monetary, payments, foreign-exchange, capital-markets
and AML/CFT framework, and what businesses should do now.

At a glance

Prohibition-first, not crypto-only. The ban covers any digital representation of
value that can be traded, transferred, exchanged or used for payment or
investment — not just cryptocurrency.
“Unless expressly authorized” is the operative test. A general business
licence, sandbox participation, or registration with another regulator does not
amount to NBE authorization.
Multiple regulators can apply at once. The same token may simultaneously
engage the NBE, the Capital Market Authority, and AML/CFT law.
Licensed e-money is not a virtual asset. Birr-funded, redeemable e-money
issued under an NBE licence remains part of the regulated payment system.

A perimeter clarification, not a self-contained code

On 23 July 2026, the National Bank of Ethiopia (“NBE”) issued a Public Notice on
Virtual Assets (the “Notice”). It reiterates that the use, purchase, sale, exchange,
transfer, trading, settlement and facilitation of transactions involving virtual assets are
prohibited unless expressly authorized by the NBE under the existing legal framework.
The Notice is deliberately broader than a warning about cryptocurrency: it reaches
digital representations of value capable of electronic trade, transfer or exchange, or use
for payment, investment or a similar purpose.

The regulated conduct is equally broad. The Notice identifies virtual asset–fiat
exchange, virtual asset–virtual asset exchange, transfer, safekeeping or administration
(including instruments enabling control), and financial services connected with an
issuer’s offer or sale. Exchanges, brokers, custodians, wallet operators, over-the-
counter desks, token issuers, payment facilitators and other intermediaries are therefore
within the clearest area of exposure. “Facilitation” also directs attention to substance
over contractual labels: calling a service “technology,” “consulting” or “peer-to-peer”
does not resolve the legal analysis if the service makes a prohibited transaction
possible.

The Notice should not, however, be treated as though it were a new proclamation
containing a complete licensing, offence and penalty regime. It expressly relies on the
existing legal framework. Its immediate significance is that it states the NBE’s regulatory
perimeter and expected compliance position; the precise legal consequence in a particular case must still be traced to the applicable proclamation, directive, licence condition and facts. The phrase “unless expressly authorized” is pivotal. Silence, a general business licence, registration with another regulator, or access to a regulatory sandbox is not equivalent to NBE authorization.

The statutory architecture behind the Notice
Monetary authority, legal tender and regulatory mandate

The National Bank of Ethiopia Proclamation No. 1359/2025 supplies the principal
institutional foundation. The NBE’s objectives include price stability and the soundness
and stability of the financial system (Article 5). Its powers extend to monetary and
foreign-exchange policy, macroprudential measures, the licensing and supervision of
financial institutions, regulation of market conduct, and the operation and supervision of
payment, clearing and settlement systems (Article 6). Article 6(21) also permits a
regulatory-sandbox framework for testing innovative financial services; the provision
creates a controlled regulatory mechanism, not a general exemption for unapproved
activity.

The same Proclamation places the Birr at the centre of domestic monetary
arrangements. The Birr is Ethiopia’s monetary unit and legal tender; monetary
transactions are presumptively expressed, recorded and settled in Birr unless the NBE
authorizes otherwise (Article 35). The NBE alone may issue legal tender (Article 36). A
privately issued token does not acquire legal-tender status because it is technologically
transferable, denominated by reference to a currency, or accepted by a particular
network.

Payment instruments and e-money: the critical distinction

The National Payment System Proclamation No. 718/2011, as amended by
Proclamation No. 1282/2023, requires NBE authorization for payment-system operation
and payment-instrument issuance. Under the amended law, a payment instrument is
issued against receipt of an equivalent amount in Ethiopian Birr. “Electronic money” is a
monetary value representing a claim on its issuer, electronically stored, issued against
receipt of equivalent Birr funds, accepted by persons other than the issuer and
redeemable in cash. Licensing and authorization are further governed by Payment
Instrument Issuer Directive No. ONPS/09/2023, as amended by Directive No.
ONPS/10/2025.

This is the most important limiting principle against an overbroad reading of the Notice:
not every digital record of value is thereby prohibited. A lawfully issued, Birr-funded,
redeemable e-money product operating within an NBE authorization is part of the
regulated national payment system. By contrast, a transferable token or “stablecoin”
does not become authorized e-money merely because it is price-stable, asset-backed
or marketed for payments. Its issuance model, redemption claim, reserve
arrangements, transferability and regulatory authorization must satisfy the payment
laws, and the virtual-asset restriction remains relevant unless the NBE has expressly
cleared the activity.

Foreign-exchange controls remain independently relevant

Article 39 of Proclamation No. 1359/2025 provides that foreign-exchange transactions
may be conducted only with banks or authorized dealers, or under special NBE
permission, subject to directives. The Foreign Exchange Directive No. FXD/01/2024, as
successively amended through 2026, governs authorized channels, accounts,
payments and transfers. A virtual asset is not automatically “foreign currency” merely
because it is traded globally: the statutory definition of foreign currency turns on legal-
tender status abroad and NBE acceptance. Nevertheless, a virtual asset–fiat
conversion, offshore funding arrangement or cross-border transfer may engage foreign-
exchange controls in addition to the Notice. Using a virtual asset as an intermediate
settlement layer is not a safe harbour from rules governing the underlying inflow, outflow
or payment.

Concurrent capital-markets and AML/CFT exposure

Digital assets that function as securities

The Capital Market Proclamation No. 1248/2021 and the Ethiopian Capital Market
Authority (“ECMA”) rules may apply concurrently where a token represents an
investment, ownership interest, debt, profit right or comparable financial claim. Article
2(19) of the Capital Market Service Providers Licensing and Supervision Directive No.
980/2024 defines “digital assets” broadly as things in digital form having value,
ownership and usage rights, and treats digital assets as securities in line with Article
2(62)(g) of the Proclamation. Public offerings and trading also engage the registration
and disclosure framework, including Directive No. 1030/2024.

The NBE and ECMA perimeters are therefore cumulative, not alternative. A token may
be a “digital asset” or security for capital-market purposes and also fall within the NBE
Notice because it is electronically traded, transferred or used for investment. ECMA
licensing or securities registration should not be assumed to substitute for express NBE
authorization; conversely, NBE authorization would not by itself satisfy capital-market
requirements. The controlling analysis is functional and may require coordinated
clearance from both regulators.

AML/CFT obligations and criminal misuse

The Prevention and Suppression of Money Laundering and Financing of Terrorism
Proclamation No. 780/2013, as amended by Proclamation No. 1387/2025, reinforces
the risk analysis without itself supplying market authorization. The amendment
broadens “property” or “fund” to encompass intangible assets and electronic or digital
documents and instruments evidencing title or an interest, and includes digital financial
service providers within the definition of financial institution (amended Article 2).
Customer due diligence, beneficial-ownership inquiry, recordkeeping, suspicious-
transaction escalation and cooperation with the Financial Intelligence Service remain
relevant wherever the statutory conditions apply.

Virtual assets can increase exposure to pseudonymous transfers, layering, fraud
proceeds and sanctions or terrorism-financing risks, but illegality should not be inferred
from technology alone. The predicate facts remain decisive. Similarly, the Computer
Crime Proclamation No. 958/2016 may apply to fraud, unauthorized access,
interference, identity misuse or other computer-enabled conduct; it does not convert
every virtual-asset interaction into a computer crime. These laws operate alongside,
rather than replace, the financial-regulatory prohibition.

Boundary questions: a functional reading

Immediate compliance priorities

1. Conduct an activity-level inventory. Map whether the business buys, sells,
   exchanges, transfers, settles, safeguards, administers, offers or facilitates virtual
   assets. Include treasury, employee payments, merchant settlement, customer
   rewards, embedded wallets, APIs, offshore affiliates and third-party agents.
2. Verify express authorization. Obtain and review the actual NBE instrument
   authorizing the activity. Corporate registration, an investment permit, an ECMA
   licence, a technology contract or sandbox engagement should not be treated as
   a substitute. Ambiguous products warrant written regulatory clarification before
   launch.
3. Separate lawful payments from virtual-asset activity. Banks, payment-service
   providers and fintechs should distinguish licensed Birr e-money and ordinary
   digital payments from virtual-asset flows. Controls should be risk-based and
   documented so that compliance does not unnecessarily disrupt lawful services.
4. Strengthen financial-crime controls. Review onboarding, beneficial ownership,
   source-of-funds, merchant monitoring, blockchain-related indicators where
   relevant, suspicious-transaction escalation, record retention and incident
   response. A prohibited or attempted transaction may still generate reporting and
   preservation duties.
5. Reassess contracts and communications. Remove virtual-asset settlement
   clauses and unapproved token offerings; review representations given to users
   and investors; allocate regulatory-change and termination risk; and ensure
   marketing does not imply NBE or ECMA approval that has not been granted.

Conclusion

The Notice confirms that Ethiopia remains a prohibition-first jurisdiction for virtual-asset
activity, subject only to express NBE authorization. Its central contribution is breadth:
the perimeter is not confined to cryptocurrency trading and extends to transfer, custody,
administration, settlement, issuer-related financial services and facilitation. At the same
time, careful legal classification remains essential. Licensed Birr e-money is not
synonymous with a virtual asset; a virtual asset is not automatically foreign currency;
and a token may attract capital-market, AML/CFT, computer-crime and other laws
without those regimes supplying the NBE authorization the Notice requires.

For businesses and investors, the prudent question is therefore not simply, “Is this
crypto?” It is: what value is represented, who issues or controls it, how it is funded and
redeemed, what rights it confers, how it moves, which regulated service is performed,
and which authority has expressly approved that service? Until a more detailed
authorization regime or product-specific guidance is issued, written clearance and
disciplined perimeter analysis are the soundest safeguards.

DABLO Law Firm LLP advises banks, fintechs, payment providers, technology
companies, investors and issuers on Ethiopian financial regulation, product structuring,
licensing, capital-markets compliance and regulatory engagement.

For further information and updates please contact Dablo Law Firm, the LEX Africa
member in Ethiopia, on info@dablolawfirm.com or visit https://dablolawfirm.com/