Ethiopia's Crypto Crackdown Stems from Wider Tax Evasion and Sports Betting Investigation

Ethiopia's recent crackdown on cryptocurrency and digital financial services can be traced to a broader investigation launched in late 2025 into an alleged 100 billion Birr ($1.8 billion) tax evasion and money laundering scheme involving payment gateways, informal foreign exchange networks, and online sports betting. The investigation has since expanded into tighter oversight of fintech firms, digital payments, and virtual assets.

The investigation prompted coordinated enforcement actions involving the Ministry of Revenues, the Ministry of Justice, the Federal Police, and other government agencies. Authorities froze the bank accounts of several major Ethiopian fintech companies, including ArifPay, Chapa, SantimPay, and Kacha, while also seizing corporate servers and business records. Several senior executives, including company CEOs, were detained as part of the investigation.

However, a subsequent review reportedly found that the alleged tax liabilities were largely the result of a calculation error by the National Bank of Ethiopia (NBE). Despite being informed that the companies owed significantly lower amounts than initially claimed, authorities allegedly continued freezing accounts and withdrawing funds, pushing several startups into financial distress.

The roots of the dispute date back to Ethiopia's 2020 digital payments reforms, which introduced new licensing frameworks for mobile money providers and payment gateway operators. Initially, payment gateways struggled due to the country's limited e-commerce activity.

That changed after authorities shut down physical sports betting outlets, driving betting activity online. Payment gateway providers rapidly became the primary infrastructure supporting online betting platforms, processing billions of Birr in transactions. By 2025, online sports betting accounted for more than 99% of payment gateway transaction volume in the country.

The financial investigations have since coincided with tighter oversight of digital assets.

The National Bank of Ethiopia recently reiterated that cryptocurrencies and other virtual assets remain prohibited unless expressly authorized, extending the warning beyond trading to include custody, transfers, exchange services, and other crypto-related activities. The central bank cited concerns including financial stability, fraud, money laundering, and illicit capital flows. The renewed warning comes despite reports that many Ethiopians, including freelancers, remote workers, traders, and small business owners, have relied on Binance P2P as an alternative channel for cross-border payments and access to foreign currency.

Interestingly, Ethiopia continues to support large-scale Bitcoin mining operations aimed at generating foreign exchange, highlighting the country's contrasting approach to institutional Bitcoin mining and retail cryptocurrency usage. Ethiopia's crackdown reflects a broader effort to strengthen oversight of digital finance rather than a standalone action against cryptocurrencies. The investigation illustrates how concerns around tax compliance, online betting, foreign exchange controls, and financial crime have increasingly shaped the country's approach to fintech and digital assets, even as it continues to support Bitcoin mining as part of its broader economic strategy.