As the adoption of cryptocurrencies continues to surge in Africa, its governments have been exploring possible ways on how to effectively regulate and maximize the opportunities that come with crypto and its underlying blockchain technology.
In a report published by Statista, on where cryptocurrency is heavily used, African countries like Nigeria, Kenya, South Africa amongst others are at the forefront of adopting the use of crypto. Hence African governments are beginning to see the need for regulation in the crypto space. Let’s take a look at some of the recent developments towards crypto regulation by some of its countries.
Nigeria, Africa’s hotspot for Crypto Release Guidelines for Digital Currency
- Nigeria Securities and Exchange Commission (SEC) inspite of its Central Bank ban of crypto transactions has decided to classify digital currencies as Securities in recently published comprehensive rules covering the most basic regulations needed for cryptocurrency in the country.
- The recently published rules are directed towards the protection, custody, and exchange of cryptocurrencies. According to the rules, to operate in the country, crypto companies will have to obtain the virtual assets service provider (VASP) license – which contains AML/KYC obligations, users disclaimer and risk acknowledgement form, etc.
- The SEC also requires crypto exchanges in particular to obtain permission before listing any assets on its exchange.
Bank of Uganda warns against use of crypto
- The Bank of Uganda has issued a warning against digital currencies, as per a report by Techcrunch.
- Cryptocurrencies are not regulated in the East African country and no entity has a permit/license as a virtual asset service provider. Now, the director of the country’s national payment system – Mr. Andrew Kawere has disclosed that the central bank was not pleased with the promotion of cryptocurrency services in the country, calling the services illegal.
- The circular release by the Apex bank reads: “Bank of Uganda has noted press reports and adverts advising the public that they can convert crypto currencies into mobile money and vice versa. We are also aware that such a conversion cannot happen without the participation of the payment service providers and or payment system operators. This is to advise that Bank of Uganda has not licensed any institution to sell cryptocurrencies or to facilitate the trade in crypto-currencies. This is in line with the official government position as communicated by the Ministry of Finance, Planning and Economic Development in October 2019.”
Central Africa Republic Becomes the First African Country to Officially Adopt Bitcoin as a Legal Tender
- In a statement signed by the president in the last of week of April, 2022, Central African Republic announced that it had adopted Bitcoin as legal tender, although backlash from local and international organizations have followed.
- In a statement signed, the country’s lawmakers unanimously passed the bill governing the use of the cryptocurrency calling it “a decisive step toward opening up new opportunities for our country”.
- The decision to adopt bitcoin as a legal tender has attracted criticism and concerns in the country and in the IMF as the decision was taken without consulting the Central Bank. As such the Apex bank in new development has now prohibiting banks in the region from facilitating cryptocurrency related payments and recognizing them as assets.