Regulation still blocks Africa’s path to mainstream crypto adoption
Cryptocurrencies continue to gain traction in Africa, fuelled by growing interest from governments that are contemplating the viability of cryptocurrencies as legal tenders. However, experts warn the continent is still a long way off from mainstream adoption mainly because of the increased need for user awareness and ways to mitigate risk.
In late April Central African Republic (CAR) adopted Bitcoin as an official currency, becoming the first country in Africa and only the second in the world to do so.
A Bill governing the use of cryptocurrency was adopted unanimously by parliament according to a statement signed by Obed Namsio, chief of staff of CAR President Faustin-Archange Touadéra.
Speaking to Reuters, Namiso said: “The president supports this Bill because it will improve the conditions of Central African citizens. He added: “It’s a decisive step toward opening up new opportunities for our country.”
Pan-African cryptocurrency exchange Yellow Card described the recent development in CAR is a laudable initiative and a major decisive step - not only towards mainstream adoption of cryptocurrencies, but equally for countries like the CAR to explore providing themselves and their citizens flexibility in currency options.
Alice Tomdio, Chief Financial Officer at Yellow Card Financial, said, “Adoption of cryptocurrency is fast becoming mainstream. Six of the top twenty countries - in terms of crypto adoption - are in Africa. 300 million people own crypto worldwide, and that's growing by the day. And education plays a big role here.”
But while the initiative has been lauded by companies like Yellow Card, there is the shadow of regulation, control, security and risk that continues to hover over cryptocurrency adoption.
Tomido continued, “There are concerns over the volatility of Bitcoin as a legal tender from a financial stability and consumer protection perspective. So I suspect there'll be some education and risk mitigation that needs to be considered. No doubt there will be a few challenges such as banks being prohibited from processing payments including facilitating any crypto related transactions. The main obstacle to the good penetration of cryptocurrencies in the CEMAC (Central African Economic and Monetary Community) region and more widely in Africa, is the lack of education and the little access to good information.”
ITWeb Africa reported earlier this month that the Central African Republic’s government was issued with a point of order by the Governor of the Bank of Central African States (BEAC) over the adoption of Bitcoin.
Reuters has reported that the Banking Commission of Central Africa (COBAC), the financial regulator that governs the banking sector within the CEMAC (Economic and Monetary Community of Central Africa) region, has reiterated its ban on cryptocurrencies, citing that this would help ensure financial stability.
Tomido added that G7 finance leaders are already calling for swift and comprehensive crypto regulation.
“I suspect many will follow CAR, Argentina, Singapore, and Switzerland. No doubt there will be a few challenges such as banks being prohibited from processing payments including facilitating any crypto related transactions.”