(3 Minutes Read)
The Court ruled that since such transactions are taxed under Tanzanian law, they cannot be deemed unlawful. The judge upheld the settlement, ordering the defendant to pay the outstanding USD 1.193 million.
A landmark High Court decision has reignited discussions on the legality of virtual assets in Tanzania, challenging the Bank of Tanzania’s (BoT) 2029 warning against cryptocurrency trading.
In Yellow Card Tanzania Limited v. Nyamwero Michael Nyamwero (Commercial Case No. 12171 of 2024), a cryptocurrency trading firm sued a former employee for breaching a settlement agreement tied to an alleged USD 1.193 million misappropriation. The defendant argued the deal was void, claiming cryptocurrency transactions were illegal under Tanzanian law.
However, the High Court dismissed this argument, noting that digital assets—including cryptocurrencies—are already operational in Tanzania through licensed service providers. Crucially, the Court ruled that since such transactions are taxed under Tanzanian law, they cannot be deemed unlawful. The judge upheld the settlement, ordering the defendant to pay the outstanding US$1.193 million.
The Finance Act 2024 introduced a 3% withholding tax on digital asset transactions, marking Tanzania’s first legal recognition of cryptocurrencies and virtual asset service providers (VASPs). However, enforcement remains a challenge, as many VASPs operate without a physical presence in the country.
Neighbouring Kenya has proposed stricter regulations, requiring VASPs to be registered entities with local offices—a model Tanzania may consider as it navigates this evolving sector.
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The ruling highlights the urgent need for Tanzania to establish a clear legal framework for virtual assets. While the BoT explores a Central Bank Digital Currency (CBDC), experts urge policymakers to balance innovation with consumer protection and risk management.
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