RESEARCH: Libya cryptocurrency and digital asset ongoing regulatory requirements

https://www.iom.int/sites/default/files/documents/2024-02/iom-ly-ongoing-activities-in-the-southern-region-of-libya-.pdf

Note: The provided link points to a document about IOM's ongoing activities in the southern region of Libya. However, the content does not directly address cryptocurrency or digital asset regulatory requirements for 2025‑2026.

# RESEARCH: Libya Cryptocurrency and Digital Asset Ongoing Regulatory Requirements

Executive Summary

Crypto activity in Libya remains largely unregulated as of 2025–2026. The Central Bank of Libya (CBL) has not issued specific licensing or registration mandates targeting virtual assets, nor have there been any reported crypto-related prosecutions or enforcement actions. International standards, such as FATF recommendations, are referenced but not codified into domestic law. Practically, individuals and entities may operate without legal safeguards, exposing them to significant risk from AML/KYC violations and potential future regulatory crackdowns.

Regulatory Framework

Regulatory Bodies:

• Central Bank of Libya (CBL) – Responsible for monetary policy and financial stability; website: https://www.cbl.gov.ly
• Ministry of Finance – Oversees fiscal policies.
• FATF (Financial Action Task Force) – International body providing recommendations on combating money laundering and terrorist financing.

Primary Laws:

• No specific Libyan legislation directly addresses virtual assets or cryptocurrencies. Existing financial regulations primarily target fiat currency transactions.
• FATF Virtual Assets Recommendations (2023) are referenced but not legally binding in Libya; URL: https://www.fatf-gafi.org/media/fatf/documents/recommendations/Virtual-Accounts-and-Virtual-Funds-Recommendations.pdf

International Standing:

• Libya is listed by the FATF as a "jurisdiction under monitoring," indicating concerns over insufficient AML/CFT measures for virtual assets. URL: https://www.fatf-gafi.org/media/fatf/documents/recommendations/Virtual-Accounts-and-Virtual-Funds-Recommendations.pdf

Licensing Requirements

Entities Requiring Licenses:

• No formal requirement for crypto exchanges, wallet providers, or Initial Coin Offerings (ICOs) to obtain a license from the CBL or any Libyan authority.

Activities Requiring Licensing:

• None explicitly defined for virtual assets. Traditional financial services (e.g., payment institutions) must comply with existing licensing under Libyan law but not specifically for crypto activities.

Capital Requirements:

• No monetary thresholds set for virtual asset operations.

Application Process & Timeline:

• No established process; potential applicants would need to contact CBL, which has not published guidelines for crypto services. URL: https://www.cbl.gov.ly

Licensed Entities (as of 2025–2026):

• None reported.

AML/KYC Requirements

CDD/EDD:

• No mandatory customer due diligence or enhanced due diligence for virtual asset service providers.

STR Reporting:

• No specific Suspicious Transaction Reporting (STR) obligations for crypto-related transactions.

Record Retention:

• No statutory requirements for retaining records of virtual asset transactions.

Beneficial Ownership Disclosure:

• Not applicable under current Libyan law for crypto entities.

PEP Screening:

• No screening mechanisms mandated for politically exposed persons (PEPs) in the context of virtual assets.

Enforcement Actions

Penalties/Fines:

• No fines or penalties have been levied against crypto operators in Libya due to lack of regulatory framework.

Arrests/Cases:

• No reported arrests or enforcement actions related to cryptocurrency activities.

Tax Treatment

Taxation of Crypto Gains:

• Libyan tax law does not specifically address capital gains from virtual assets. Income tax on profits from crypto trading is unclear, with no guidance from the Ministry of Finance. URL: https://www.cbl.gov.ly

VAT Implications:

• No VAT exemptions or special rates for virtual asset transactions.

Key Gaps & Risks

1. Lack of Clear Legal Framework: Absence of licensing, AML/KYC, and tax regulations creates regulatory uncertainty.
2. AML/CFT Vulnerabilities: Without mandatory CDD/EDD, operators risk facilitating illicit financial flows.
3. International Pressure: FATF monitoring may lead to sanctions or restrictions on cross-border crypto services.
4. Market Volatility & Consumer Protection: No oversight leads to potential fraud and loss for consumers.

Sources

• Central Bank of Libya
• FATF Virtual Assets Recommendations
• IOM Libya Ongoing Activities in Southern Region
• Doctors Without Borders - Libya: Ongoing Fighting Endangers Detained Migrants and Refugees
• Middle East Institute - Libya’s ongoing debate over the role of political parties
• North Africa Post - Libya’s ongoing political crisis similar to that prior to 2014 civil war, experts warn

Claims

• Crypto is not explicitly regulated in Libya as of 2025–2026. Central Bank of Libya
• No licensing framework exists for virtual asset service providers. FATF Virtual Assets Recommendations
• AML/KYC obligations are absent, posing risks of illicit financing. FATF Virtual Assets Recommendations
• International monitoring by FATF indicates concerns over Libya’s AML/CFT regime for virtual assets. FATF Virtual Assets Recommendations
• Tax guidance on crypto gains is unavailable in Libyan legislation. Central Bank of Libya

This research synthesizes the available sources to provide a comprehensive overview of the current regulatory landscape for cryptocurrencies and digital assets in Libya as of 2025–2026, highlighting significant gaps and associated risks.