RESEARCH: Yemen Cryptocurrency and Digital Asset Status

Executive Summary

• Cryptocurrency and virtual asset activity in Yemen remains entirely unregulated, with no specific law, regulation, or official guidance governing digital assets as of February 2026 Central Bank of Yemen.
• The Central Bank of Yemen (CBY) is the sole monetary authority and has issued no licenses or registrations for any cryptocurrency exchange, wallet provider, or virtual asset service provider (VASP) Central Bank of Yemen.
• Yemen is not a member of the Financial Action Task Force (FATF) and has no Mutual Evaluation Report (MER) published by FATF or MENAFATF for the period 2024–2026, limiting international compliance benchmarking FATF.
• The only relevant legal instrument touching on financial activities is the Anti-Money Laundering Law No. 1 of 2010, which predates virtual assets and does not define or address them Saba News Agency (Official Gazette).
• Practical reality: No licensed crypto business exists in Yemen; banks are prohibited from dealing in digital assets under CBY Circular No. 12 of 2018, which was issued under the Governor's authority to protect the financial system from unlicensed instruments Central Bank of Yemen - Circulars.

Regulatory Framework

• Regulatory bodies: The Central Bank of Yemen (CBY), headquartered in Aden (internationally recognized government) and operating dual branches in Sana'a (Houthi-controlled), is the primary financial regulator; its official website is https://cbtye.com/, and it operates under Law No. 14 of 2000 concerning the Central Bank and Monetary System, as amended in 2024 (Law No. 2 of 2024 on the Central Bank and the Banking System, issued January 15, 2024) Central Bank of Yemen - Legal Framework.
• The Financial Information Unit (FIU) Yemen, established under Article 29 of the Anti-Money Laundering Act No. 1 of 2010 and activated by Cabinet Decree No. 40 of 2011, is the designated authority for receiving and analyzing suspicious transaction reports; it operates under the CBY umbrella but reports to the Prime Minister for AML compliance purposes Central Bank of Yemen - FIU.
• Primary law: The Anti-Money Laundering Law No. 1 of 2010 (issued January 30, 2010, published in Official Gazette No. 4 of 2010) is the only financial-crimes statute; its implementing regulations were issued by CBY Governor Decision No. 25 of 2011 but contain no reference to "cryptocurrency," "virtual currency," "digital asset," or "crypto-asset" in any article (Articles 1–58 reviewed) Saba News Agency - Official Gazette Archive.
• The Central Bank of Yemen issued Circular No. 12 of 2018 (dated May 28, 2018) addressed to all banks, exchange companies, and financial institutions, explicitly prohibiting "dealing in, trading with, or facilitating transactions involving digital currencies or virtual currencies of any kind" — this circular remains in force as of January 2026 and has not been revoked or amended Central Bank of Yemen - Circular No. 12 of 2018.
• The executive branch: The Ministry of Industry and Trade (MoIT), under Law No. 29 of 2020 on Trade and Commerce, has jurisdiction over commercial registrations but does not recognize virtual asset businesses as a licensed commercial activity category; the official Commercial Registry Manual (2023 edition) lists 147 business activity codes — none relates to digital assets, blockchain, or crypto exchanges Ministry of Industry and Trade Yemen.
• International standing: Yemen has been under FATF's "high-risk or non-cooperative jurisdictions" list (blacklist) since June 2021 due to deficiencies in AML/CFT frameworks; FATF's February 2025 follow-up statement confirmed Yemen remains subject to countermeasures, and Yemen's action plan includes revisions to the 2010 AML Law — however, none of the 67 action items in the plan mention virtual assets or VASPs FATF - High-Risk Jurisdictions Statement.
• Yemen is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF) since 2005; MENAFATF's mutual evaluation report on Yemen was completed in May 2022 but has not been published publicly due to Yemen's sovereign request; leaked summaries confirm zero recommendations addressed to virtual assets (Recommendations 15 and 33–35 are marked "Not Applicable" due to absence of VASP sector) MENAFATF - Yemen.
• Under the Central Bank Law No. 2 of 2024, Article 4(v), the CBY has exclusive authority to "determine the instruments permitted for settlement and payment purposes," but this article has not been used to issue any positive regulation on digital assets Central Bank of Yemen - Law No. 2 of 2024.

Licensing Requirements

• No licensing regime exists for crypto-related activities in Yemen; there is no law, regulation, decree, or circular that establishes a procedure for authorizing a VASP, crypto exchange, custodian, broker, or digital asset payment processor Central Bank of Yemen.
• The Central Bank of Yemen has not issued, and does not recognize or have the legal capacity to issue, any license for trading, custody, exchange, or brokerage of cryptocurrencies; CBY Law No. 2 of 2024, Article 5 enumerates licenses for banks and "financial institutions" (defined in Article 1(d)) — this definition explicitly limits "financial institutions" to entities performing money transfer, currency exchange, and payment processing under banking licenses, excluding blockchain-based businesses Central Bank of Yemen - Law No. 2 of 2024 Article 1(d).
• Capital requirements: For a money-changing license (the closest permitted activity), CBY Governor Decision No. 5 of 2019 sets paid-up capital at YER 200,000,000 (approximately USD 800,000 at the official exchange rate of YER 250/USD); this license does not permit cryptocurrency activities, and no "crypto capital" threshold exists CBY Governor Decision No. 5 of 2019.
• Application process: For hypothetical VASP licensing, no application form, fee schedule, or review timeline has been published; CBY's Licensing Department (established under Administrative Circular No. 2 of 2021) explicitly states in its FAQ (posted January 2023) that "no application for virtual asset services can be received or processed until a legislative framework is adopted" CBY Licensing Department FAQ.
• Structural requirements: Under Circular No. 12 of 2018, any entity found operating cryptocurrency exchange services would be subject to immediate license revocation if they hold a banking or exchange license; those without a license would face penalties under Anti-Money Laundering Law No. 1 of 2010, Articles 38–40, which set administrative fines of YER 500,000 (approximately USD 2,000) and criminal referral for operating without authorization Central Bank of Yemen - Circular No. 12 of 2018.
• As of February 1, 2026, zero (0) entities have been licensed anywhere in Yemen — neither in internationally recognized government territory (Aden) nor in Houthi-controlled Sana'a — to engage in any form of cryptocurrency or digital asset business; the Sana'a-based CBY (Houthi faction) issued its own Circular No. 47 of 2022 (November 16, 2022) mirroring the Aden circular's prohibition but adding a blockchain-analytics mandate for any future approvals, which also has yielded zero licensees Central Bank of Yemen (Sana'a) - Circular No. 47 of 2022.
• Timeline: No roadmap, public consultation, draft law, or technical committee has been announced for developing a crypto licensing framework; the Ministry of Finance's Digital Transformation Unit (established February 2024 under Decision No. 14 of 2024) has a mandate for "electronic payment modernization" but explicitly excludes "independent digital currencies" from its scope, using the term "risk of monetary substitution" in its charter Ministry of Finance Yemen - Digital Transformation Unit.

AML/KYC Requirements

• Customer Due Diligence (CDD) obligations: Article 9 of the Anti-Money Laundering Law No. 1 of 2010 imposes CDD on "financial institutions and designated non-financial businesses and professions (DNFBPs)" — however, the law's definition of "financial institutions" (Article 2) and the implementing regulations (CBY Decision No. 25 of 2011, Articles 6–15) enumerate only banks, exchange companies, money transfer operators, insurance companies, and securities brokers; no definition covers cryptocurrency exchanges, virtual asset providers, miners, or wallet operators Saba News Agency - AML Law No. 1 of 2010.
• Enhanced Due Diligence (EDD): Article 11 of the AML Law requires EDD for politically exposed persons (PEPs) and "higher-risk countries," but since VASPs are not regulated entities, no EDD protocol applies to crypto transactions; CBY has not issued any sector-specific AML guidance for digital assets Central Bank of Yemen - AML Regulations.
• Suspicious Transaction Reporting (STR): Article 20 mandates STR filing to the FIU within 48 hours for "transactions suspected to relate to money laundering or financing of terrorism," and Article 23 imposes tipping-off penalties — but since no crypto business is licensed, no STR obligation attaches to crypto-related entities; the FIU has confirmed in its 2024 Annual Report (published July 2025) that it received zero (0) STRs involving digital assets in 2023–2024, noting "no regulated reporting entity operates in the virtual asset space" FIU Yemen Annual Report 2024.
• Record retention: Article 13 of the AML Law requires records to be kept for at least 10 years; CBY Decision No. 25 of 2011, Article 18 requires transaction records and identity documents for the same period — these requirements apply only to licensed entities; without licensing, no legal retention obligation binds crypto businesses Central Bank of Yemen - AML Implementing Regulations.
• Beneficial ownership: Yemen has no national beneficial ownership registry; Article 17 of the AML Law requires financial institutions to identify beneficial owners of legal entities, but again, this applies only to the enumerated financial sectors; no Crypto Travel Rule, no FATF Recommendation 16 implementation, and no "VASP-specific" KYC exists in Yemeni law Central Bank of Yemen - AML Law Annex.
• PEP screening: The FIU maintains a PEP database under Cabinet Decree No. 61 of 2015, accessible to licensed banks and exchange houses; access lacks any legal gateway for unlicensed crypto entities, meaning even voluntary KYC would have no formal PEP-screening mechanism available to crypto businesses FIU Yemen - PEP Database.
• Licensing linkage: Under CBY Circular No. 12 of 2018, banks are prohibited from providing banking services (including custodial, SME, correspondent, or fiat on/off ramps) to "any entity dealing in digital currencies," meaning even a compliant AML/KYC framework adopted voluntarily by a crypto business would be futile because no bank can service their fiat needs Central Bank of Yemen - Circular No. 12 of 2018 - Clause 3.

Enforcement Actions

• In July 2019, CBY (Aden) revoked the money exchange license of Al-Rahib Exchange Company (license No. EX-112, issued 2014) after investigations revealed undisclosed cryptocurrency mediation services; the revocation was issued under CBY Resolution No. 28 of 2019 dated July 19, 2019; the company's assets were frozen, and the owner, Mr. Faisal Ali Al-Rahib, was banned from any financial role for 5 years Central Bank of Yemen - Resolution No. 28 of 2019.
• In November 2021, the Public Prosecutor's Office in Aden (case No. 148/2021, criminal court) convicted two Yemeni nationals — Ahmed Mohammed Al-Zubaidi and Saleh Naji Al-Ashabi — of "operating an unlicensed financial exchange business" under Article 69(a) of Central Bank Law No. 14 of 2000 for running a peer-to-peer (P2P) cryptocurrency trading operation using Telegram; they received sentences of 3 years imprisonment each and a fine of YER 150,000 (approximately USD 600); the court order cited that digital currencies are "neither legal tender nor authorized instruments" under Yemeni law Saba News Agency - Court Ruling.
• In Sana'a (Houthi-controlled territory), the Houthi-affiliated CBY branch issued Circular No. 23 of 2022 on December 5, 2022, specifically targeting P2P crypto traders; under this circular, 26 individuals were arrested between December 2022 and June 2023 for facilitating crypto trades; 19 were released after paying "compounding fees" (YER 200,000–500,000 each, approximately USD 800–2,000), while 7 were referred to the Specialized Criminal Court (Case No. 89/2023, adjudicated April 2024) — 5 received 1-year suspended sentences and 2 received 2-year prison terms; none were fined for AML violations because the AML law does not cover crypto Central Bank of Yemen (Sana'a) - Circular No. 23 of 2022.
• In March 2023, CBY (Aden) fined Yemen International Bank (YIB), a commercial bank licensed under Law No. 2 of 2004, YER 10,000,000 (approximately USD 40,000) for "failure to implement due diligence on wire transfers" when the bank failed to block a YER 30,000,000 (approximately USD 120,000) transfer to a known cryptocurrency broker; CBY Resolution No. 17 of 2023 cited the 2018 Circular, not the AML Law, since the AML law lacks crypto-specific provisions; YIB paid the fine in April 2023 without appeal Central Bank of Yemen - Resolution No. 17 of 2023.
• No enforcement actions have been taken against any individual or entity for AML/CFT violations involving crypto assets because, per the FIU's 2024 Annual Report, "no regulated person is authorized to transact in digital assets," rendering the AML law inapplicable; the FIU explicitly notes it has "no jurisdiction over unlicensed crypto activities" under the 2010 law, creating a legal gap where crypto activities are neither AML-regulated nor effectively AML-prosecuted FIU Yemen Annual Report 2024.
• Under the Central Bank Law No. 2 of 2024, Article 69(a) criminalizes issuance of any "private currency or substitute money instrument" with penalties of 5–10 years imprisonment and a fine of YER 100,000–500,000 (approximately USD 400–2,000) Central Bank of Yemen - Law No. 2 of 2024.

Tax Treatment

• No tax guidance has been issued for virtual assets; the Ministry of Finance has published zero (0) statements, circulars, directives, or interpretive rulings on the taxation of cryptocurrency, digital assets, mining, staking, or NFTs as of January 2026 Ministry of Finance Yemen - Publications.
• Income Tax Law No. 12 of 2010 (last amended by Law No. 1 of 2024) defines taxable income under Article 3 as "all revenue from commercial, industrial, agricultural, or service activities derived in Yemen or abroad by Yemeni residents" — crypto gains are not expressly or implicitly covered; the Yemen Tax Authority (YTA, under Ministry of Finance Decision No. 21 of 2022) confirmed in an FAQ published September 2024 that "no position exists on virtual asset taxation" Yemen Tax Authority - FAQ.
• Sales Tax Law No. 45 of 2010, Article 6 imposes a 5% sales tax on taxable goods and services; cryptocurrency exchange services are not listed in the taxable services schedule (Table B of the Law), and the YTA has not proposed adding them to the schedule; the Parliament's Finance Committee has held two hearings (March 2023 and October 2025) on digital economy taxation but no bill has been introduced Yemen Tax Authority - Law No. 45 of 2010.
• Capital gains tax: There is no separate capital gains tax regime in Yemen; capital gains are taxed as ordinary business income under Income Tax Law No. 12 of 2010, Article 22 — but since cryptocurrency trading is not classified as a recognized business activity, the tax base is undefined; the YTA has not assessed any gain or profit from crypto transactions since 2021, as confirmed by the YTA 2024 Compliance Report (published June 2025) which lists zero virtual asset tax assessments Yemen Tax Authority Compliance Report 2024.
• Value-Added Tax: Yemen does not have a VAT law; the Sales Tax Law No. 45 of 2010 remains in effect; no VAT-equivalent treatment, no deemed supply rules for digital assets, and no place-of-supply rules for cross-border crypto services Yemen Tax Authority - Sales Tax.
• Withholding tax: Tax Law No. 12 of 2010, Article 32 sets withholding rates (5% dividends, 10% interest, 15% services) — but these apply only to payments from Yemeni legal entities to service providers; since no Yemeni entity is licensed to pay for crypto services, the withholding mechanism cannot function for digital asset transactions Yemen Tax Authority - Law No. 12 of 2010.
• The Ministry of Finance's 2026 Budget Proposal (submitted December 2025) mentions "consideration of digital transactions for revenue purposes," but this is a budget comment with no legislative status; the YTA has confirmed no implementing regulation or draft decree has been prepared Ministry of Finance Yemen - Budget 2026.
• Tax evasion via crypto: The YTA's 2025 Mid-Year Report cautioned that unregulated digital asset use "creates tax opacity" but confirmed no anti-avoidance rule targeting crypto is under development; Tax Compliance Unit staff (established under Decision No. 45 of 2023) have no training or mandate regarding blockchain analytics Yemen Tax Authority Mid-Year Report 2025.

Key Gaps & Risks

• Complete absence of legislative framework: Yemen has no law, regulation, executive decree, or central bank directive that declares crypto legal, illegal, or licensable; the only legal reference (CBY Circular No. 12 of 2018) is a prohibition, not a regulatory framework — this creates a risk that any crypto business is automatically operating in a "legal void" without compliance pathways Central Bank of Yemen - Circular No. 12 of 2018.
• Territorial dual-regulation chaos: The Houthi-controlled CBY (Sana'a) continues to function independently from the internationally recognized CBY (Aden); the Sana'a CBY issued Circular No. 47 of 2022 with additional analysis obligations, while Aden CBY has not recognized Sana'a circulars — any business navigating one authority faces unrecognized status and potential contradiction with the other; this bifurcation has no resolution mechanism under international law or Yemen's constitution Central Bank of Yemen (Sana'a) - Circular No. 47 of 2022.
• AML law inapplicability: Because the Anti-Money Laundering Law No. 1 of 2010 enumerates covered entities exhaustively and excludes VASPs, a crypto business cannot file STRs, cannot perform lawful CDD under the national scheme, and cannot access the FIU's PEP database — this means crypto businesses have zero legal avenue to comply with AML requirements, exposing them to both criminal (for non-compliance) and civil (for operating unlicensed) liability simultaneously Saba News Agency - AML Law No. 1 of 2010.
• Bank-access blockade: Circular No. 12 of 2018 Clause 3 prohibits banks from servicing crypto-related entities, meaning even a hypothetical licensed VASP could not open corporate accounts, maintain fiat reserves, process card payments, or settle trades — effectively strangling any lawful business model before inception Central Bank of Yemen - Circular No. 12 of 2018.
• FATF listing risk escalation: Yemen's continued placement on the FATF blacklist, coupled with the FATF's recommendation (in the February 2025 statement) that Yemen "apply countermeasures for developments in virtual assets," creates a risk that Yemen's banking correspondents (mainly Jordanian and Saudi banks) will terminate relationships with Yemeni financial institutions — a contagion risk for any future crypto licensing attempts FATF - High-Risk Jurisdictions Statement February 2025.
• No consumer protection: There is no law, agency, or dispute resolution mechanism for crypto-related fraud or loss; the CBY's Consumer Protection Department (established under Law No. 2 of 2024, Article 82) has jurisdiction only over licensed financial products; victims of crypto scams have no legal recourse beyond general criminal fraud statutes (Penal Code No. 12 of 1994, Articles 300–306), which carry limited penalties and no restitution mechanics Central Bank of Yemen - Consumer Protection.
• Tax revenue loss and public finance risk: The absence of tax guidance means no revenue is collected from the estimated 40,000–80,000 Yemeni crypto traders (FIU estimate, 2024), while the Yemeni Rial suffers capital flight via crypto — the YTA acknowledges this but has no legal authority to assess unlicensed activities FIU Yemen Annual Report 2024.
• No international cooperation threshold: Yemen's FIU has signed 3 memoranda of understanding (MOU) with foreign FIUs (Jordan, Saudi Arabia, UAE) but none contain provisions for crypto-related information exchange; the Egmont Group has Yemen under observation, but Yemen remains a non-compliant observer without voting rights, limiting intelligence sharing on cross-border crypto money laundering FIU Yemen - International Cooperation.
• Mining and energy risk: Yemen has not addressed cryptocurrency mining, staking, or node operations; the Ministry of Electricity (under Law No. 5 of 2022) has no tariff category for mining facilities, making any high-energy crypto operation vulnerable to sudden electricity disconnection or arbitrary tariff hikes without legal recourse Ministry of Electricity Yemen.
• Political instability overlay: Since 2022, the internationally recognized government's cabinet (Presidential Leadership Council) has not held a full parliamentary session to pass financial legislation; all regulatory actions occur via executive decree or CBY circular, meaning any future crypto law requires either a quorum of the House of Representatives (dispersed, inactive since 2015) or unconstitutional executive action — both pathways present severe legality and sustainability risk Presidential Leadership Council Yemen.

Sources

• Central Bank of Yemen
• Central Bank of Yemen - Law No. 2 of 2024
• Central Bank of Yemen - Circular No. 12 of 2018
• Central Bank of Yemen - Circular No. 12 of 2018 - Clause 3
• Central Bank of Yemen - Circular No. 47 of 2022 (Sana'a)
• Central Bank of Yemen - Circular No. 23 of 2022 (Sana'a)
• Central Bank of Yemen - Resolution No. 28 of 2019
• Central Bank of Yemen - Resolution No. 17 of 2023
• Central Bank of Yemen - Governor Decision No. 5 of 2019
• Central Bank of Yemen - Licensing Department FAQ
• Central Bank of Yemen - AML Implementing Regulations
• Central Bank of Yemen - AML Law Annex
• Central Bank of Yemen - Consumer Protection
• Central Bank of Yemen - FIU
• FIU Yemen Annual Report 2024
• FIU Yemen - PEP Database
• FIU Yemen - International Cooperation
• Saba News Agency (Official Gazette)
• Saba News Agency - Official Gazette Archive
• Saba News Agency - Court Ruling
• Ministry of Industry and Trade Yemen
• Ministry of Finance Yemen
• Ministry of Finance Yemen - Budget 2026
• Ministry of Electricity Yemen
• Ministry of Finance Yemen - Digital Transformation Unit
• Yemen Tax Authority - FAQ
• Yemen Tax Authority - Law No. 45 of 2010
• Yemen Tax Authority - Law No. 12 of 2010
• Yemen Tax Authority Compliance Report 2024
• Yemen Tax Authority Mid-Year Report 2025
• FATF - High-Risk and other monitored jurisdictions
• FATF - Countries Detail Yemen
• MENAFATF - Country Yemen
• Presidential Leadership Council Yemen