Cryptocurrencies, alongside blockchain, have proven to be one of the most impressive fintech innovations, as they hold huge promises of restructuring the economy of many countries whilst equally granting escape from the limitations of the global economy.
Crypto operates on a decentralized finance system which is largely based on encryption and validation. This means that the government and the central banks have only a little influence over it.
While interests in crypto as a form of digital currency have been expanding around the globe, reports on the state of cryptocurrency regulation in Africa, show that only a few African countries have an encouraging stance on crypto. A few have even banned its use, but in most places, this innovation is stuck in a regulatory limbo. In this article, we examine the state of cryptocurrency regulation in African countries with a considerable number of interest.
The Nigerian government had earlier expressed concerns surrounding the appeal of crypto and have attempted to place a ban on it. Over the years, financial regulators have constantly warned Nigerians about the inherent risk of using crypto.
Notwithstanding these warnings, Nigeria remains the largest crypto community in Africa and has become a popular destination for crypto trading. Given the heightened use of crypto by Nigerians, there is, however, the need to establish regulations guiding its use.
The current legal status of crypto in Nigeria remains uncertain. Nigeria is yet to instigate a legal framework for crypto currencies. There is nonetheless a great interest to formulate one quite shortly. The Nigeria’s Securities and Exchange Commission is currently working to ensure that a framework is being put in place for crypto regulation in Nigeria.
As reported by a local newspaper in the country, the legislative arm of the Nigerian government is currently reviewing a bill on cryptocurrency.
Recently, Africans experienced a larger volume of crypto regulations, trade, and ownership, as the fintech sector has consistently thrived in the continent. This is particularly true in South Africa which has become popular for its progressive stance in the crypto and blockchain community, and has even proposed a favorable regulatory framework for crypto and blockchain.
South Africa recently released a policy paper that outlines 30 recommendations for the regulation of cryptocurrency and other relevant service providers. The policy enables crypto to be accepted for domestic payment purposes and also implemented the anti-money laundering and travel rule.
In Kenya, the use of crypto has not been specifically banned. Rather, it has been proclaimed ‘unregulated’.
The Central Bank Of Kenya (CBK) has cautioned Kenyans about transacting or investing in crypto. They advised that it could be a Ponzi scheme of some sort, and may result in a risky venture. In consideration of this, the CBK has expressed its reluctance to rush into the regulation of crypto currencies, defining the situation as “open to innovations”.
However, the Central Bank Of Kenya has declared a policy on the use of crypto, which serves as an indication to improvements in their plans for crypto regulation.
The Bank of Ghana, just like many other banks in Africa, had previously pronounced crypto as illegal within the country and has warned citizens against crypto trading due to the risks involved.
Currently, the bodies responsible for financial control in Ghana, have not settled on a regulation for crypto. However, the BOG has made mention of looking into regulations for digital payments in the country.
Their approach towards crypto is also beginning to take a new form with the announcement from the Bank Of Ghana recently that the country may issue it’s own digital currency in the future.
The Reserve Bank of Zimbabwe (RBZ) had also quite been reluctant to make crypto legal in their country, due to the high number of fraudulent activities that comes with it. Also, the Zimbabwe government had earlier banned local banks from processing crypto.
However, the RBZ has seen the need to regulate crypto, as it has become a global trend. In an impressive turnaround from its previous anti-crypto stance, the RBZ has proposed a crypto regulatory sandbox. Currently, Zimbabwe has started formulating a policy framework to guide the business activities of crypto firms.
Most North African countries have been observed to have demonstrated more opposition concerning the adoption of crypto and blockchain. Countries like Morocco, Algeria and Libya have issued bans against all activities involving cryptocurrencies.
On a concluding note, the digital community is seeing a completely new phase of evolution, and there is the need for every country to regulate crypto. With each passing day, people are showing greater rates of involvement in crypto, and many have continued its use, even without authorization from the government or the presence of any regulatory framework set up for it.