Sub-Saharan Africa has undoubtedly suffered many regulatory errors in using cryptocurrencies. As most countries in the region struggle to withstand economic insecurity and threatening pressure, even as the complex effects of COVID-19 begin, it seems that many Africans, especially the millennia, are no longer waiting for the government.
The main problem with restraining regulation seems to be a combination of resistance and hesitation on the part of regulators, which has largely been the result of little or no understanding of cryptocurrencies.
Andrew Nevin, partner and chief economist at PricewaterhouseCoopers Nigeria, spoke to the Cointelegraph about African regulatory attitudes towards cryptocurrencies:
I think it’s fair to say that people all over the continent are cautious. There were many problems with cryptocurrency and different types of fraud: the first coin offers were dropped and projects that did not have enough value or have collapsed. So I think the authorities are doing the right thing by doing it step by step. ”
For the most part, the governments of most sub-Saharan countries have not yet taken a clear stance on cryptocurrencies.
Waiting for the match
Many African governments have no idea what to do with cryptocurrencies, although there has been some progress recently. For example, in a recent statement, the Nigerian Securities and Exchange Commission has officially designated digital assets as part of its regulations. In the past, the Central Bank of Nigeria has struggled to warn citizens to do business in digital currencies in order to launch an investigation into potential policy proposals. In Kenya, the government has gone from comparing cryptocurrencies to hierarchical charts to creating a target audience to explore the challenges and benefits of underlying blockchain technology.
Over the years, the legitimacy of Bitcoin (BTC) and other cryptocurrencies has varied greatly across the region, with more than 60% of African governments not yet declaring their position.
Blockchain and Cryptocurrency in Africa – A geographical overview
While some countries have explicitly declared support for cryptocurrencies, most countries have implemented a total or partial ban. The most common attitude, however, is caution. Countries such as Kenya, Ghana, Lesotho, Swaziland, Uganda, Zambia and Zimbabwe have warned citizens against cryptocurrencies without preventing them from trading or using cryptocurrencies. Other countries such as Namibia and Burundi also introduced trade bans without banning use, citing a lack of consumer protection.
Similar to what we see in Kenya, the Ugandan government mentions “One Coin Digital Money” as a cryptocurrency along with, among others, Bitcoin, Litecoin (LTC) and XRP, and puts them all on a par with cryptocurrencies. OneCoin was a notorious multi-level marketing plan that allowed “actors” to receive incentives from selling memberships to a company without an original product.
If we look critically at these countries, we can conclude that the Ponzi schemes have damaged the reputation of legitimate crypto projects and can reduce cases. Paxful CEO Ray Yosef spoke to Cointelegraph about it. Paxful is the leading peer-to-peer cryptocurrency exchange that has had the highest growth in P2P trading in Africa to date, providing incoming and outgoing cryptocurrency flows in the region:
It should be understood that regulators are just beginning to define cryptocurrencies. Many of them have just started their research and have heard about it in the ugliest way, especially in Africa. Because nine out of ten people I spoke to in Africa have been tricked into a cryptocurrency scam or know someone who has been tricked. There are a huge number, but when you consider the spread of market levels at several levels operating in Africa such as OneCoin, this is Ponzi […] and fraud with cryptocurrency mining. Everyone in Africa was cheated. ”
Youssef also added that corruption is one of the factors reducing the regulation of cryptocurrency in the region:
“Unfortunately, things are a little different in Africa than in the West. Everyone wants to get a little wet at the table, and that’s what regulators think […] and that’s a problem for people in the African coding space.”
Possible rapid regulatory stimuli
Despite lax rules, it is clear that there has been a steady increase in interest in cryptocurrencies in the region. Countries like Nigeria consistently rank first in internet searches for bitcoin, as shown in Google Trends.