The State of Crypto Adoption in Comoros
Source: Envato
The fact that Comoros is not mentioned in the Chainanalysis Crypto report shows how low the adoption rate is, also a 0% crypto ownership data on the TripleA 2023 report.
Looking at the current situation in Comoros, cryptocurrency use is still in its very early days. The main reason for this slow start is that there need to be clear rules or laws about how people can use or trade cryptocurrencies in the country.
This creates uncertainty, as people and businesses need to figure out what’s allowed and what isn’t. The government hasn’t said cryptocurrencies are illegal, but they haven’t made rules to support them either. This “wait and see” approach makes many people hesitant to get involved with crypto.
Source: Triple. A
The government seems more focused on improving their regular banking and money systems right now, which puts crypto on the back burner.
Even though some people in Comoros are interested in cryptocurrencies because they could help them connect with global markets and have more control over their money, the lack of clear rules makes it risky for them to get involved.
Crypto Law In Comoros
Source: Envato
As of 2024, there aren’t any specific laws about cryptocurrency in Comoros. The government hasn’t said it’s illegal, but they haven’t made rules about it either. It’s kind of in a middle ground – not banned, but not officially regulated.
The Central Bank of Comoros (the country’s main financial authority) keeps an eye on crypto but is very careful about it. They warn people about the risks of using cryptocurrency, like how its value can change quickly and how you might lose money without any way to get it back.
The Central Bank of Comoros has been monitoring the global cryptocurrency market closely but has chosen to remain cautious. They’ve issued warnings about the risks involved, such as price fluctuations, financial losses, and the lack of legal protection in case of problems.
Some people in Comoros are getting interested in using crypto, especially for sending money to family abroad or as a way to invest. However, because there aren’t clear rules, it’s tricky for these people to know what they can and can’t do, or how they should handle taxes on their crypto money.
The country also faces some practical challenges with crypto. Many people don’t know much about it, and Comoros doesn’t have all the technology needed to make using cryptocurrency easy and widespread.
So while you can use crypto in Comoros, there’s no real protection or guidance from the government. The whole situation shows that Comoros needs clearer rules about cryptocurrency to help protect people who want to use it and to make sure it’s used safely.
Obtaining a Crypto License in Comoros
Comoros offers a relatively straightforward way to get a cryptocurrency business license. This license allows companies to legally operate crypto-related businesses like exchanges, trading platforms, and blockchain projects.
The main authority handling these licenses in Comoros is the Anjouan Offshore Finance Authority (AOFA), specifically on the island of Anjouan. The process is open to both local and foreign companies, and you don’t need to be based in Comoros to apply.
The basic costs are quite reasonable compared to many other countries. You’ll need to pay about 300 USD per year for the company registration (IBC formation) and 5,000 EUR for the actual license. The licensing process typically takes about 1-2 months.
To apply, you’ll need to provide several documents:
- A completed application form
- A business plan
- Identification documents for all company directors and shareholders, police clearance certificates, bank references
- An anti-money laundering (AML) policy manual.
The regulator also requires financial guarantees of at least 250,000 EUR, which can either be paid in cash or secured through local insurance.
The benefits of getting a Comoros crypto license include legal compliance, the ability to operate internationally, easier banking relationships, and increased credibility with potential customers.
The license allows for various activities including cryptocurrency trading, exchange operations, providing custody services, and offering financial advice.
Crypto Taxation in Comoros
Source: Envato
Right now, Comoros doesn’t have clear rules about how to tax cryptocurrencies. While Comoros doesn’t officially recognize crypto as real money, they view it more like a piece of property you own, similar to how you might own a car or furniture.
If you make money by buying and selling cryptocurrency in Comoros, you’ll probably need to pay taxes on your profits, just like you would with other types of income.
The tax rate could be anywhere from 0% to 30%, depending on how much money you make overall. Unfortunately, there aren’t any special tax breaks for crypto trading in Comoros.
The income tax rates in Comoros range from 0% to 30%. The applicable tax rate for cryptocurrency transactions would depend on the individual taxpayer’s income and tax bracket.
When it comes to paperwork, if you trade crypto in Comoros, you need to tell the government about it on your yearly tax forms.
It’s important to keep good records of all your crypto buying and selling, including when you did it and how much money was involved. This is especially useful since the rules might change in the future as more people start using cryptocurrency in Comoros.
Economic Situation in Comoros
Source: Freepik
Comoros is facing some interesting economic challenges. While the country is growing (3.1% in 2023), many people are still poor – about 38% of the population lives in poverty.
The country relies heavily on money sent home by Comorians working abroad (remittances), and it’s dealing with high debt and banking issues where about 15% of loans aren’t being paid back.
Cryptocurrency could potentially help Comoros in several ways:
- Cheaper Remittances: Right now, when Comorians working abroad send money home, they often pay high fees through traditional money transfer services. Cryptocurrencies could make these transfers cheaper and faster, letting families keep more of the money sent home.
- Protection Against Inflation: While inflation in Comoros has improved (dropping from 12.4% to 9.1%), cryptocurrencies could offer people another way to store value, especially during economic uncertainty.
The most practical first step might be to explore cryptocurrency for remittances, as this could provide immediate benefits to many Comorian families while the country builds up its digital infrastructure and regulatory framework for broader crypto adoption.
Challenges to Crypto Adoption In Comoros
Source: Freepik
Crypto adoption in Comoros faces several challenges:
- Regulatory Ambiguity: The absence of a dedicated legal framework for cryptocurrencies creates uncertainty for users and businesses. This grey area can deter potential adopters who seek clear guidelines and legal protections
- Cybersecurity Risks: The prevalence of scams, hacking incidents, and lack of knowledge on secure storage practices pose significant risks. Promoting cybersecurity awareness and encouraging the use of reliable wallets are crucial steps to mitigate these risks
- Market Volatility: The highly volatile nature of cryptocurrency markets can lead to financial losses, making potential users hesitant to invest.
Potential Benefits of Crypto Adoption In Comoros
Source: Freepik
Crypto adoption in Comoros could bring several benefits:
- Financial Inclusion: Cryptocurrencies can provide access to financial services for the unbanked population, enabling them to save, invest, and engage in e-commerce
- Remittances: Cryptocurrencies can facilitate cheaper and faster cross-border remittances, benefiting both senders and recipients
- Economic Growth: By fostering entrepreneurship and job creation, crypto adoption can stimulate economic growth and sustainable development
- Decentralization: Cryptocurrencies offer a decentralized financial system, reducing reliance on traditional banks and central authorities
- Global Market Access: Cryptocurrencies enable seamless global transactions, eliminating the need for currency exchanges and reducing transaction costs
- Security: Blockchain technology ensures secure and transparent transactions, reducing the risk of fraud and enhancing trust in financial dealings
Conclusion
Comoros is taking a cautious approach to cryptocurrency, with no clear laws in place.
While there are potential benefits like cheaper remittances and financial inclusion, the lack of regulation and infrastructure poses challenges.
To encourage crypto adoption, Comoros needs to address these issues by creating a clear legal framework, promoting cybersecurity, and investing in digital infrastructure.
