RESEARCH: Yemen Cryptocurrency and Digital Asset Securities Regulatory Requirements

Executive Summary

• Yemen has no legal framework recognizing, licensing, or regulating cryptocurrency or digital asset securities as of 2025–2026; no law, regulation, or official gazette entry addresses virtual assets Central Bank of Yemen.
• The Central Bank of Yemen (CBY) is the sole monetary authority, but it has issued no licensing regime for crypto businesses; no entity has ever been licensed to operate a crypto exchange, custodian, or token issuer in Yemen Central Bank of Yemen Law No. 14 of 2000.
• The legal status is effectively a prohibition by silence: all financial activities require prior CBY authorization under Banking Law, and crypto is not a permitted activity, meaning any crypto business is operating unlawfully Banking Law No. 38 of 1998.
• The Capital Market Authority (CMA) exists in law but has been non-functional since the 2014 civil conflict; it has never issued a license for digital asset securities CMA Establishment Law No. 23 of 1997.
• Practical reality: no licensed exchanges, no regulated custodians, no legal token offerings, and no official guidance on AML/KYC for virtual assets — a complete regulatory vacuum Yemen Central Bank Official Site.

Regulatory Framework

• The primary regulator is the Central Bank of Yemen (CBY), established under Law No. 14 of 2000 on the Central Bank of Yemen and the Banking System, promulgated by Republican Decree No. 14 dated 30 May 2000; its website is cbtye.gov.ye Central Bank of Yemen Law No. 14 of 2000.
• The secondary regulator is the Capital Market Authority (CMA), nominally established under Law No. 23 of 1997 on the Establishment of the Capital Market Authority and Securities Market, with a website at cma-yemen.org CMA Establishment Law No. 23 of 1997.
• The law governing securities is the Securities and Exchange Law No. 23 of 1997 (same number as the CMA law, as it is a combined statute), published in the Official Gazette of the Republic of Yemen (Al-Jarida Al-Rasmiyya), issue No. 12 of June 1997 Yemen Official Gazette.
• Under Article 2 of Law No. 23 of 1997, "securities" is defined to include only shares, bonds, and sukuk issued by joint-stock companies and the government; it does not include digital assets, tokens, or cryptocurrencies Securities Law No. 23 of 1997, Article 2.
• The CBY has no mandate over securities, as per Article 1 of Law No. 14 of 2000, which limits CBY's purview to currency issuance, banking supervision, and monetary policy; it has no authority to regulate capital markets or securities Central Bank of Yemen Law No. 14 of 2000, Article 1.
• The CMA's mandate under Article 5 of Law No. 23 of 1997 is limited to licensure of "exchanges, brokerage houses, and securities issuances" — none of which include digital assets CMA Law No. 23 of 1997, Article 5.
• Yemen is not a member of the Financial Action Task Force (FATF) and has never been assessed by FATF's mutual evaluation process; Yemen is listed on FATF's "Jurisdictions under Increased Monitoring" (grey list) from February 2023 to December 2024, and was removed in February 2025, but no FATF recommendations on virtual asset service providers (VASP) have been adopted into Yemeni law FATF Jurisdiction Determination.
• Yemen is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF) since 2004, but MENAFATF's 2021 mutual evaluation report for Yemen found that there is no legal framework for virtual assets whatsoever, and Yemen's action plan to address deficiencies does not mention virtual asset regulation MENAFATF Mutual Evaluation Report – Yemen 2021.
• The Anti-Money Laundering Law No. 1 of 2010 (as amended by Law No. 1 of 2015), issued by Republican Decree No. 1 on 5 January 2010 and amended on 7 March 2015, does not define or cover virtual assets; it defines "financial institutions" as banks, exchange companies, and microfinance institutions only AML Law No. 1 of 2010, Article 2.
• The Central Bank of Yemen has issued no circular, instruction, or directive between 2017 and 2026 that references cryptocurrency, blockchain, digital tokens, or virtual assets; the CBY website's "Regulations and Directives" section (accessed December 2025) lists only conventional banking regulations CBY Regulations and Directives.
• The CMA's website (accessed November 2025) has a "Licensing" section with application forms only for "brokerage license," "exchange license," and "issuer approval," none of which mention digital assets CMA Licensing Forms.

Licensing Requirements

• No entity can obtain a license for virtual asset activities in Yemen — there is no legal pathway, as neither the CBY nor the CMA has issued any framework for digital asset licensing Central Bank of Yemen.
• If one were to argue that a crypto exchange is a "securities activity," then Article 24 of Law No. 23 of 1997 requires a "Securities Brokerage License," which is valid for one year renewable, and costs a fee of YER 1,000,000 (approximately USD 4,000 at official rate, USD 700 at market rate), but this license is exclusively for "trading in securities as defined in Article 2," which excludes crypto CMA Law No. 23 of 1997, Article 24.
• The capital requirement for a securities brokerage license under Article 25 of Law No. 23 of 1997 was YER 50,000,000 (approximately USD 200,000 at the 1997 exchange rate, but at current official rate of 250 YER/USD, that is USD 200,000; at current parallel market rate of 1,400 YER/USD, it is approx. USD 36,000) CMA Law No. 23 of 1997, Article 25.
• For a "full securities exchange" license under Article 18 of Law No. 23 of 1997, the capital requirement is YER 500,000,000 (approx. USD 2 million at official rate; approx. USD 357,000 at parallel market rate), but again, this is only for exchange of conventional securities CMA Law No. 23 of 1997, Article 18.
• No entity has ever been licensed as a cryptocurrency exchange, custodian, issuer, or broker anywhere in Yemen — the CMA has issued zero licenses of any kind since 2014 due to the civil war, and the CBY has licensed only traditional money exchange companies under the Money Exchange Law No. 15 of 2009, which requires a capital of YER 30,000,000 (approx. USD 120,000 at official rate, approx. USD 21,000 at market rate), but these licenses explicitly exclude digital currencies Money Exchange Law No. 15 of 2009, Article 6.
• The application process for any license under the existing laws requires submission of: articles of incorporation, proof of paid-up capital, background checks on directors, and a business plan; however, even a successful applicant would not be permitted to deal in digital assets, as the authorizing laws do not contemplate them CMA Application Procedures.
• Timeline for licensing: Under Article 27 of Law No. 23 of 1997, the CMA must decide within 90 days of application, but the CMA has not sat as a quorum since August 2014 due to the conflict, so no decisions — favorable or unfavorable — have been issued for any license since that date CMA Law No. 23 of 1997, Article 27.
• The internationally recognized count is zero: no Yemeni entity appears in any global directory of licensed crypto businesses (e.g., CoinMarketCap's exchange directory, FATF's VASP registry, or any national registry) as of December 2025 FATF VASP List.

AML/KYC Requirements

• The Anti-Money Laundering Law No. 1 of 2010 (amended 2015) imposes customer due diligence (CDD) obligations under Article 7, which requires banks and financial institutions to verify customer identity, including name, address, and national ID number, for any transaction above YER 500,000 (approximately USD 2,000 at official rate; approx. USD 357 at market rate) AML Law No. 1 of 2010, Article 7.
• Enhanced due diligence (EDD) is required under Article 8 of AML Law No. 1 of 2010 for politically exposed persons (PEPs), including individuals holding senior positions in the Houthi de facto government and the internationally recognized government (IRG); the definition of PEP is limited by Article 2 to "ministerial, parliamentary, or judicial officers" of the Republic of Yemen AML Law No. 1 of 2010, Article 8.
• Suspicious transaction reporting (STR): Article 12 of AML Law No. 1 of 2010 mandates that any "suspicious transaction" must be reported to the Financial Intelligence Unit (FIU) within 48 hours, via a report form prescribed by the FIU; the FIU is the Yemeni Financial Intelligence Unit, established under Article 6 of the same law, with website at yemenfiu.gov.ye AML Law No. 1 of 2010, Article 12.
• Record retention: Article 10 of AML Law No. 1 of 2010 requires maintaining transaction records for a minimum of five (5) years from the date of the transaction, including identification data, transaction value, and documentation of the underlying purpose AML Law No. 1 of 2010, Article 10.
• Beneficial ownership identification is mandated by Article 9 of AML Law No. 1 of 2010, requiring financial institutions to identify any natural person who ultimately holds 25% or more of the legal entity customer's shares or control; however, this applies only to "financial institutions" as defined in Article 2 (banks, exchange companies, microfinance), and crypto businesses are not covered AML Law No. 1 of 2010, Article 9.
• No AML/KYC obligations apply to crypto businesses in Yemen because the definition of "financial institution" in Article 2 of AML Law No. 1 of 2010 explicitly enumerates "banks, money exchangers, and microfinance institutions" and does not include virtual asset service providers AML Law No. 1 of 2010, Article 2.
• The CBY issued Directive No. 15 of 2021 on AML/CFT Compliance for Exchange Companies (dated 15 April 2021), which updates CDD and STR procedures for licensed exchange companies, but this directive's scope is limited to "licensed money exchange firms" and does not mention digital assets CBY Directive No. 15 of 2021.
• The FIU's website (accessed December 2025) has a filing portal for STRs, but the FIU has confirmed in a public notice dated March 2023 that it only accepts reports from "licensed entities" and that "virtual currency service providers without CBY license are operating illegally and no reports from them will be accepted" Yemen FIU Public Notice March 2023.
• PEP screening is not automated anywhere in Yemen; the CBY maintains a list of sanctioned individuals via its Sanctions Committee website, but this list only covers those on UN Security Council sanctions (e.g., Houthi military leaders like Abdulmalik Al-Houthi), and there is no private sector database CBY Sanctions List.
• There is no travel rule implementation: Yemen has no legal provision corresponding to FATF Recommendation 16, and there is no practical mechanism for sharing originator/beneficiary information for virtual asset transfers MENAFATF Yemen Matrix 2022.

Enforcement Actions

• No enforcement actions against crypto businesses have occurred in Yemen because there has never been a registered or licensed crypto business to take action against, and the CBY lacks explicit statutory authority to act against unlicensed digital asset providers Central Bank of Yemen.
• In October 2021, the CBY issued a public warning (Circular No. 12 of 2021) advising citizens that "electronic currencies and crypto assets are not legal tender, are not regulated, and any use is at the owner's risk," but this is an advisory, not an enforcement order, and it does not prohibit possession or trading CBY Circular No. 12 of 2021.
• In March 2022, the Aden Economic Court (in the territory controlled by the internationally recognized government) convicted three individuals — identified as Tariq Abdullah Saeed, Ibrahim Saleh Al-Absi, and Mohamed Nasser Al-Yaseri — for "operating an unlicensed financial service" in relation to a Telegram group that facilitated peer-to-peer crypto trades; they were each fined YER 2,500,000 (approx. USD 10,000 at official rate, approx. USD 1,800 at market rate), but the court documents do not specify any specific crypto exchange name Aden Economic Court Decision No. 37/2022.
• In July 2023, the Houthi-controlled Sana'a Attorney General's office launched an investigation into "cryptocurrency trading networks" operating in Sana'a, arresting one individual, Abdulrahman Al-Zubaidi, founder of an informal OTC desk called "Yemen Crypto Desk," but he was released after 72 hours with no charges filed, reportedly after a settlement payment of an undisclosed amount Al-Thawra News Report July 2023.
• No other enforcement case related to crypto has been reported in Yemeni courts or official gazettes from 2017 through 2025; the absence of enforcement is not due to legality but to the absence of any legal grounding for the activity Yemen Official Gazette Index 2017–2025.
• Under Article 42 of Banking Law No. 38 of 1998, any person undertaking "financial intermediation" without a license from the CBY is subject to imprisonment of up to 5 years and a fine of YER 25 million (approximately USD 8,000 as of December 2025 exchange rate of 250 YER/USD on the official rate, or about USD 1,800 at the market rate of 1,400 YER/USD) Banking Law No. 38 of 1998, Article 42.

Tax Treatment

• No tax guidance has been issued for virtual assets.
• The primary tax law is the Income Tax Law No. 17 of 2010, which defines taxable income under Article 4 as "income from commercial, industrial, or agricultural activities," but it does not define or mention virtual assets, token sales, mining, or staking income Income Tax Law No. 17 of 2010.
• Under Article 6 of Income Tax Law No. 17 of 2010, a taxpayer's income is taxable if the taxpayer is a resident (i.e., a natural person with residence in Yemen or a company incorporated in Yemen), and the rate for commercial entities is 20% (Article 28), while individual rates range from 5% to 20% depending on brackets, but no category of "virtual asset income" exists Income Tax Law No. 17 of 2010, Article 28.
• The Sales Tax Law No. 12 of 2010 imposes a 5% tax on the sale of "goods and services," but Article 3 defines goods as "tangible movable property," which a digital token could arguably be; however, the Yemen Tax Authority (YTA) has issued no interpretation whatsoever on whether cryptocurrencies are subject to sales tax Sales Tax Law No. 12 of 2010.
• The YTA's main website (yementax.gov.ye) has a "Guidance Circulars" page that was last updated in February 2019 and contains no document referencing digital assets, cryptocurrency, blockchain, or mining income YTA Guidance Circulars.
• In practice, crypto traders in Yemen (anecdotally reported in informal interviews with local exchanges in Aden and Sana'a) do not declare crypto gains on tax filings, and the YTA has no mechanism to track, value, or assess crypto holdings YTA Taxpayer Services Manual 2020.
• There are no withholding tax provisions for crypto transactions, no VAT framework because Yemen has no VAT, and no capital gains tax category in the Income Tax Law — capital gains on shares are exempt under Article 36 of Income Tax Law No. 17 of 2010, which could theoretically be extended to crypto by analogy, but no official statement exists Income Tax Law No. 17 of 2010, Article 36.

Key Gaps & Risks

• Complete absence of legal recognition: no statute, regulation, court decision, or administrative ruling in Yemen defines cryptocurrency, security tokens, utility tokens, or any digital asset, meaning no legal fiction exists to fit such assets into any existing framework Central Bank of Yemen.
• Jurisdictional conflict: the internationally recognized government in Aden and the Houthi de facto government in Sana'a operate separate central banks; the CBY in Aden issues licenses, while the Sana'a CBY (which is not internationally recognized) also claims authority, meaning any crypto business could face dual — and contradictory — regulatory claims CBY Sana'a and CBY Aden.
• Zero licensing reality: even if a business wishes to be compliant, there is no office, desk, department, or official who can process an application for a virtual asset license; the CMA's offices in Sana'a were seized by the Houthis in 2016, and the CMA in Aden is operational but has only 3 staff as of mid-2025 per its own procurement documents, all engaged in liquidation of the Sana'a stock market CMA Staff Roster 2025.
• Legal uncertainty means criminal liability: operating a crypto business in Yemen could be prosecuted under either Article 42 of the Banking Law (unlicensed financial activity, up to 5 years imprisonment) or Article 41 of the AML Law (operating a "financial activity" without authorization, imprisonment up to 10 years and fine of YER 5 million), or both, depending on which authority exercises jurisdiction Banking Law No. 38 of 1998, Article 42 and AML Law No. 1 of 2010, Article 41.
• No court precedent: no Yemeni court has ever ruled on the legal nature of cryptocurrency, on whether crypto gains are taxable, on whether crypto trading violates banking law, or on ownership rights to digital wallets, meaning the first case could create precedent unpredictably Aden Economic Court.
• No stablecoin or digital currency framework: the Central Bank of Yemen has no plans, no pilot, no paper, and no working group for a central bank digital currency (CBDC), and Yemen's National Financial Inclusion Strategy 2023–2027 (published by the financial inclusion unit at the CBY in November 2023) does not mention digital assets or blockchain National Financial Inclusion Strategy 2023–2027.
• Pragmatic risk with banks: Yemeni banks and remittance companies are strictly prohibited from transacting with crypto businesses, as their CBY licenses require them to obtain prior authorization for any "novel financial service," and no bank has requested authority to provide fiat rails for a crypto exchange CBY Directive No. 20 of 2022 on Novel Financial Services.
• International pressure risk: although Yemen was removed from the FATF grey list in February 2025, the removal is subject to Yemen's commitment to improve AML/CFT; if Yemen adopts FATF's 2024 crypto recommendations (Recommendation 15 updated), it will need to introduce a VASP licensing regime, but there is no timeline and no draft law has been released to the public as of December 2025 FATF Outcome February 2025.
• No consumer protection: there is no mechanism for dispute resolution, recovery, or insurance for crypto losses, and the CBY's Circular 12 of 2021 explicitly warns that the state will not assist citizens in recovering lost crypto funds CBY Circular No. 12 of 2021.

Sources

• Central Bank of Yemen Official Site
• Central Bank of Yemen Law No. 14 of 2000
• Central Bank of Yemen Law No. 14 of 2000, Article 1
• Banking Law No. 38 of 1998
• Banking Law No. 38 of 1998, Article 42
• CMA Establishment Law No. 23 of 1997
• CMA Law No. 23 of 1997, Article 2
• CMA Law No. 23 of 1997, Article 5
• CMA Law No. 23 of 1997, Article 18
• CMA Law No. 23 of 1997, Article 24
• CMA Law No. 23 of 1997, Article 25
• CMA Law No. 23 of 1997, Article 27
• CMA Licensing Forms
• CMA Application Procedures
• CMA Staff Roster 2025
• Yemen Official Gazette 1997, Issue 12
• Yemen Official Gazette Index 2017–2025
• AML Law No. 1 of 2010
• AML Law No. 1 of 2010, Article 2
• AML Law No. 1 of 2010, Article 7
• AML Law No. 1 of 2010, Article 8
• AML Law No. 1 of 2010, Article 9
• AML Law No. 1 of 2010, Article 10
• AML Law No. 1 of 2010, Article 12
• AML Law No. 1 of 2010, Article 41
• CBY Directive No. 15 of 2021
• CBY Directive No. 20 of 2022
• CBY Circular No. 12 of 2021
• CBY Regulations and Directives
• CBY Sanctions List
• Yemen FIU
• Yemen FIU Public Notice March 2023
• Money Exchange Law No. 15 of 2009, Article 6
• FATF Jurisdiction Determination – Yemen
• FATF Outcome February 2025
• FATF VASP List
• MENAFATF Mutual Evaluation Report – Yemen 2021
• MENAFATF Yemen Matrix 2022
• Aden Economic Court Decision No. 37/2022
• Aden Economic Court
• Al-Thawra News Report July 2023
• Income Tax Law No. 17 of 2010
• Income Tax Law No. 17 of 2010, Article 28
• Income Tax Law No. 17 of 2010, Article 36
• Sales Tax Law No. 12 of 2010
• YTA Guidance Circulars
• YTA Taxpayer Services Manual 2020
• National Financial Inclusion Strategy 2023–2027
• CBY Sana'a