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Nigeria And Africa At Large Needs Crypto Regulation For More Adoption



Bitcoin in Africa

In recent years, there has been increased mainstream adoption of cryptocurrency and blockchain technology in Africa. According to Chainalysis, Africa is the second-largest continent for peer-to-peer (P2P) trading with two African countries ranking in the top eight of Chainalysis crypto adoption index.

Crypto payments and remittances is increasingly becoming a common feature in many parts of Africa, allowing enthusiasts, business owners and individuals to make fast, cost-efficient transactions, thereby, increasing productivity in some of the most underbanked communities.

In 2020, Nigeria led the continent’s growth having weekly P2P volumes within the range of $5 million to $10 million, followed by its runner ups, Kenya and South Africa with between $1 million and $2 million. Bitcoin and other cryptocurrencies have been a revolution in Africa, and investors across the globe are recognising its scope.

The increasing popularity of cryptocurrencies has finally caught the attention of financial regulators in Africa. Cryptocurrencies, as a market full of decentralize innovations has become a viable alternative for many Africans, solving microcredit problems such as high-interest rates, high overhead costs, slow registration times and corruption.

Despite the tremendous merits of cryptocurrencies on the economy, fraudsters and bad players have taken advantage of its decentralized system. Since cryptocurrencies cannot be controlled by a central authority or entity, African governments are taking hostile approache to regulate these digital currencies.

The recent ban of commercial banks and financial institutions from providing crypto related services to Nigerians by the Central Bank of Nigeria (CBN), and the regulation of certain crypto players in South Africa by Financial Sector Conduct Authority (FSCA) is a testament to this.

Considering the massive attention the crypto industry has garnered over the years, the regulation of space is increasingly inevitable. But like every nascent market, bad regulations from the government can stiffen innovation. This is why players in the crypto space believe that regulators should rather create an enabling environment that will further boost the adoption of this new tech, while creating stringent rules to take out bad actors.

Why should there be crypto regulations?

1. Government control and supervision – accountability;
2. Cyber-Crime control;
3. Protection of investors;
4. Accurate valuation on cyptocurrency’s worth;
5. Standards for ethical practices.

Government Control and Supervision – Accountability

Every sector of the economy needs the government’s regulation for increased output and accountability. The cryptocurrency market belongs to the financial sector of the economy, which is already an area that calls for special scrutiny, audit and needs to be regulated, since it measures a country’s economic growth and strength, amongst other things.

Most citizens are now seeing cryptocurrencies as a way of evading tax and enriching their own pockets, with KYC (know your customer) and tight regulations put in place. This will improve the country’s GDP (gross domestic product), thereby, leading to reduced cost of living and enhanced country’s economic health.

Cyber-Crime and Fraud Control

Cryptocurrencies are decentralized and allow anonymity. Bad players and scammers are using them for extortion, laundering, kidnapping, ransomware in darknet marketplaces and fueling terrorism. Transactions in cryptocurrencies do not require real names, so it is easy for criminals to remain unidentified or anonymous as they move and use cryptocurrencies.

Money launderers make use of cryptocurrencies since they have inherently low levels of regulations, and are not governed by a central authority. This essentially means that their transactions cannot be closely monitored. These have made the masses see cryptocurrencies as scams, ponzi or get-rich schemes. With the government providing the structural measures and necessary regulations to curb this negative menace, this will in return, increase crypto adoption in Africa.

Protection of Investors

According to the Securities and Exchange Commission (SEC) in a report of September 2020, they proposed a new set of rules that will regulate cryptocurrency (either coins or tokens) investments when the character of the investments qualifies as securities transactions. The SEC is majorly looking at regulating Initial Coin Offerings (ICOs) as securities and is cracking down on fraudulent means of acquiring wealth through it.

The SEC, as a government organization which is empowered to regulate investments and securities business, should implement laws and regulations that will protect investors from illegal or fraudulent ICOs. Also, if anything goes wrong, the owners of the projects can be held accountable. This will create a system of confidence in the mind of institutional or retail investors, which in turn, acts as a catalyst for crypto adoption.

Accurate Valuation of Cyptocurrency’s Worth

The parabolic climb of Bitcoin in late 2017, led to a cataclysmic price retrace in which many investors faced overwhelming liquidation due to market manipulation, over-valuation, and outright scams. Many Virtual Asset Service Providers (VASPs) helped to facilitate these Wild West conditions. When there are regulations, real identities can be connected to illicit behavior by the regulators or government. Fake buy and sell orders implemented just to generate “pump and dump” action, will be harder to get away with.

Compliant Virtual Asset Service Providers (VASPs) will have the ability to collectively verify and cross-check the real identities behind the public addresses, and pass this information over to the respective authorities when required. This will ensure that cryptocurrencies are judged solely on their merits,thereby, creating a level playing field for all cryptocurrency investors and enthusiasts, leading to growth and crypto adoption in Africa.

Standards for Ethical Practices

There should be rules and regulations for every practice. No action should be discretionary. This will ensure that the masses to have faith in the system, and in turn, boost crypto adoption.

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Market Watch

Jack Dorsey‘s Square to develop open source Bitcoin mining



Jack Dorsey Bitcoin

On Friday, October 15, Twitter CEO Jack Dorsey announced that American fintech company, Square, would be looking to get into Bitcoin mining. Jack Dorsey who is also Square’s CEO announced this on Twitter which subsequently sent waves through the bitcoin market, surging its price to almost a record high, rising over $62,000 over the weekend. According to the Twitter boss, Square is looking to building an open source Bitcoin mining system that would be available to individuals and businesses.

Sharing his thoughts further on the initiative, he stated that “Mining needs to be more distributed” and that “the more decentralized [mining] is, the more resilient the Bitcoin network becomes. He also mentioned the apparent inaccessibility of mining stating that “Bitcoin mining should be as easy as plugging a rig into a power source.

Dorsey also believes that bitcoin mining “needs to be more efficient and that “clean and efficient energy use” would be undoubtedly beneficial to the digital currency in the long run.

Dorsey ended the thread by saying that a “technical investigation would be undertaken by a Square team led by Jesse Dorogusker, Square’s hardware lead. If successful, this initiative would be another of Square’s bitcoin focused projects which includes a Bitcoin hardware wallet.


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Financial Leaders from G7 Release Guidelines for Central Bank Digital Currency



Source: World Atlas

At a meeting that was held in Washington, yesterday, October 13, G7 leaders discussed central bank digital currency and endorsed 13 public policy principles with regards to their implementation. The financial leaders from G7 agreed that CBDCs would complement cash and should not be detrimental to the monetary system. The G7 leaders have been discussing CBDCs this week concluding that they should do no harm and meet rigorous standards.

It should be noted that G7 includes finance leaders in advanced economic nations comprising of Canada, France, Germany, Italy, Japan, the U.S and the U.K. the G7 leaders make it mandatory that any newly launched CBDC should not harm the central bank’s ability to perform its duty of maintaining financial stability. In a joint statement by the G7 finance ministers and central bankers, they said that, 

“Strong international coordination and cooperation on these issues help to ensure that public and private sector innovation will deliver domestic and cross-border benefits while being safe for users and the wider financial system.” 

The joint statement further states that CBDCs are complements to cash and could serve as a liquid or safe settlement assets with an added advantage of anchoring existing payment systems. CBDCs issuance should be entrenched in a long-standing public commitment to transparency, rule of law, and sound economic governance. The statement added at CBDCs must be so efficient that they are fully interoperable on a cross-border basis. 

The G7 leaders agreed that they had a duty to minimize the incidence of ‘harmful spillovers to the international monetary and financial system” 

The G7 statement reiterated a similar statement earlier made by G20 that no global stablecoin project should begin operation until such a token has addressed legal, regulatory and oversight requirements. 

Countries like China and Nigeria are ahead of the pack with regards to the adoption of digital Yuan and Naira respectively. China’s crackdown on cryptocurrency may be a step forward for the country’s plan to promote its digital Yuan. Nigeria, on the other hand, postponed the launch of its eNaira in deference to the 61st anniversary of Nigerian independence on Oct 1. 

However, countries like the US and the UK are dragging their foot with regards to the introduction of CBDCs to their financial system. There are insinuations that America is in danger of being left behind technologically and financially if it doesn’t get serious with the implementation of CBDC in its financial system.

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Learning Guides

Understanding Speculation and Crypto Volatility



Everyone who dabbles in the crypto industry learns almost immediately that the market is very volatile and oftentimes things can change very quickly. That volatility is the fundamental reason why some investors make absolutely stunning gains in so short a time and others lose a lot of money as well. Trading in crypto is one of the riskiest ventures any person can undertake and as they say, it’s not for the faint of heart. The risks can be mitigated of course and sometimes depends specifically on the coin or crypto asset being traded on, barring general market trends.

Nevertheless, to get to the bottom of the volatility concept, one must understand speculation in the market. To start off, the concept of speculation isn’t limited to cryptocurrencies, on the contrary, speculation has existed for as long as economics and trading has. But it is worth saying that speculation is often a feature of novel sectors, assets, commodities and the like. So, even though cryptocurrencies have been around for more than a decade, they’re still in their infancy as far as markets go. One could say that the market is still trying to find its feet.

One of the fundamental reasons why cryptocurrencies are so volatile is that they are fundamentally backed by nothing of value outside the attention that they get. Unlike many fiat currencies which are either pegged to another currency’s value or whose value is unilaterally determined by a central authority, cryptocurrencies only derive value as a function of how many people are willing to use is to transact, i.e. trust in the asset because other people trust it. As a rule of thumb, the larger the number of people who accept the asset, the more valuable it becomes.

This is one of the hallmarks of speculative trading. In the crypto world or in any market that’s novel and untested, many people are in it to win it which means their strategies in trade has the objective of making as much profits as possible in the short term. Therefore, the market enters a subtly dangerous cycle of rapidly changing prices of assets. Basically, investors typically buy assets when prices are low and wait. As more investors are attracted to the commodity for its low prices, it sets off a cascade where more people buy in, causing the price to steadily rise. 

However, all good things must come to an end and it almost always gets to a breaking point whereupon the price gets high enough for investors to begin to sell. This reverses the earlier cascade and as more and more investors pull out, the prices can fall dramatically causing even more to sell off in fear of losing whatever investments they have left. The prices having fallen resets the game and primes investors to begin buying again.

Volatility has been one of the talking points of many critics of cryptocurrencies often comparing it to a Ponzi scheme. And in certain cases, persons of interest with large pulls and audiences can substantially affect the rate at which prices rise and fall. Other factors include government regulations. Volatility at its core reflects the often chaotic nature of trade and market interactions and human hopes and fears.


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