While most countries around the world are embracing cryptocurrencies, African nations have adopted a slightly different approach. Several countries in this region, including Nigeria and Kenya, have chosen to ban crypto transactions or warn their banks to avoid them. At the same time, others like South Africa are promoting digital asset transactions.
This article analyses the current state of affairs in the continent and assesses whether the prospects for crypto could improve in the future.
Brief History
Crypto trading made its way to Africa during the early 2010s. The region was already familiar with digital transactions such as remittances and mobile money. This made it easier for the locals to adopt cryptocurrency. However, there is still a long way to go in terms of ensuring large-scale adoption. One major hurdle has been the fact that countries like Nigeria have made cryptocurrencies illegal. In 2017, the Nigerian central bank advised banks not to hold or transact in cryptocurrencies.
Similarly, in 2018, Kenya also warned its banks against processing crypto transactions. The primary reason given for this decision was that crypto payments could be considered unsafe.
Countries such as South Africa took a different approach. In 2019, the nation published a paper that recommends elaborate regulations covering crypto transactions in the country. These regulations were proposed in order to promote the safe use of digital assets.
Current Status
In some African countries, there is no regulation governing crypto transactions. These include nations like Kenya and Ghana. These two countries have recorded a major surge in crypto transactions over the past couple of years. At the other end of the spectrum, South Africa continues to develop and refine its cryptocurrency regulations. In fact, the national regulator in the country is embracing cryptocurrencies and predicting that their use will increase.
It is also worth noting that crypto scams are also fairly common in Africa. Some of the most damaging crypto scams have been Africrypt and Mirror Trading International. As a result, regulators in South Africa have been trying to find a middle path that enables them to check on such scams while also ensuring that the benefits of cryptocurrencies can be realized.
Future Outlook
In all likelihood, the majority of African countries will continue their hard stance against crypto payments. This is due to the vast number of scams that have already taken place in this region. However, such a scenario would have an adverse impact on digital asset transactions. There is a need for the regulators to find a middle ground that ensures that the locals can reap the benefits of digital asset transactions, while risk mitigation and compliance are prioritized.
Challenges ahead for regulation and scam prevention
Africa continues to face certain tough decisions when it comes to crypto regulation. The respective governments within this region must look to curb the spread of scams while also developing regulations that promote the fair use of digital assets. Nations such as South Africa have shown that such a balanced approach is possible.
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