On the 25th of February 2021, the Bank of Ghana issued a press release revealing how it intends to handle innovations in the financial space. With special preference given to blockchain, this stance by Ghana’s Apex over blockchain and by extension cryptocurrency, largely contradicts that of its West African counterpart. The Apex Bank of Africa’s largest economy has only a few weeks ago expressed its distrust for the blockchain-powered currencies, noting that they are a means to an illegal end.
While the Central Bank of Nigeria has since received a unanimous backlash from many Nigerians, hopes that it will reverse its ban on cryptocurrencies isn’t imminent. Its stance on the widely acclaimed cryptocurrencies has been reiterated by the CBN governor who says ” crypto is money out of thin air used by players in an electronic dark world where transactions are extremely opaque, black, not visible and not transparent.”
Despite the Central Banks unequivocal stance against crypto, Nigeria remains one of the leading countries in crypto usage globally. With over half a billion dollars transacted in cryptocurrencies to date, crypto usage shows no signs of stopping. Rather the ban has drawn the attention of many to the decentralized currencies and why they seem to be causing a stir in the country’s financial ecosystem.
Ghana thinks different
In the circular released by the Central Bank of Nigeria, it claims other countries view cryptocurrencies with as much disdain as it does.
Apparently, Ghana isn’t one of those countries. The circular released by the Bank of Ghana, reveals it’s giving a chance to the blockchain-powered currencies to operate within its financial space.
Taking into consideration that the current state of finance is evolving, the West African nations top bank is prepared to build a regulatory framework that oversees and supports financial institutions in taking on innovative models on delivering financial services.
Ghana’s direction on crypto can be perceived as friendly unlike Nigeria’s. In what many call an outright ban on cryptocurrencies, the position taken by Africa’s most populous nation on crypto is anything but friendly.
Perhaps the Ghanaian financial regulators are accepting an unstoppable crypto takeover, a market capitalization of over a trillion dollars makes crypto a technological innovation that should not be ignored.
With top institutions such as Black Rock, Tesla and Grayscale acquiring large volumes of bitcoin and other currencies, it shows that crypto isn’t a force to be stopped or controlled but only regulated.
The Bank of Ghana is already on the right path to getting a regulated hold of cryptocurrencies. Fully backing financial institutions to experiment with blockchain, the Bank can understand the technology better and forge an advance regulatory framework that keeps the technology within legal bounds.
A sandbox is a controlled environment that simulates real-life usage of a program or product
Bank Ghana’s regulatory and innovation sandbox pilot, is in collaboration with EMTECH service LLC. EMTECH is a fintech company for central banks. The company allows central banks to test projects such as central bank digital currencies in the sandbox with APIs that enable Fintech and mobile money apps to work with the CBDC
The company will help with a proper and faster review of innovative projects in Fintech. With multi-party collaborations and integrating seamless workflows, EMTECH will assist the Bank of Ghana in getting a detailed review of what any Fintech innovation will look like.
Though an accommodating approach to crypto and blockchain in Fintech the Bank’s direction is still cautious, it creates an enabling environment where it wields the power not only to regulate but to understand.
State of Crypto in Africa.
Twitter CEO, Jack Dorsey has said there’s no better place for bitcoin to thrive than Africa. However, some Africans don’t share the same view. Some countries like Nigeria see it as a threat to it’s financial stability. Ironically Africa’s financial instability has been highlighted as the reason why bitcoin would thrive there.
Bitcoin is already a lifeline for many as the value of the naira sinks.
While crypto adoption in Africa is no doubt on the rise, the lack of crypto infrastructure is still a major hurdle for many African nations. Only 20 of the 10,267 bitcoin nodes are in Africa.
Likewise, an unequivocal stance by many African countries on the crypto issue still stands in the way of further adoption and more use cases. 60 per cent of African countries do not have a clear stance or regulation concerning digital currencies.
Morocco, Nigeria, Algeria and Libya have pronounced an outright ban on cryptocurrencies. Making usage in such countries practically impossible or strenuous.
The economic realities in the many African States make cryptocurrencies a viable alternative for international transactions as well as wealth creation. Unfortunately, African governments are not taking the necessary steps to understand the technology and how it can help the current financial situation.
The Bank of Ghana has taken a step in the right direction with its sandbox pilot. Though a cautious first step, it improves the understanding of the technology and could facilitate an innovative and never before seen regulatory framework that will usher cryptocurrencies into mainstream finance