Crypto Adoption Acceleration in Africa Flares Regulatory Concerns

Following the rapid increase in cryptocurrency adoption this year, Africa has raised concerns over the implementation of crypto regulations.

By · Sep 25, 2020 . 6min read

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Africa has encountered acceleration in crypto adoption. The continent appears as the second largest region for P2P (peer-to-peer) trading, and two African nations are standing in the top eight of the Chainalysis Crypto adoption index. Crypto payments have grown as a standard characteristic in various parts of the continent, providing businesses and individuals to make fast, cost-efficient transactions, enhancing productivity in some of the most underbanked communities. 

Nevertheless, the booming growth has caught Africa’s financial regulators’ attention. This has sparked concerns that a hurry to precede heavy-handed oversight could reduce innovation in the local crypto industry. The effectiveness of cryptocurrency in striving economies can directly threaten governments and premier financial institutions. Many dread that a short-sighted blanket ban or censorship could be on the cards.

Limitations on Crypto May Affect Routine Crypto Transactions

Various countries depend on cryptocurrencies for remittances and cross border payments as they make this more affordable and faster than conventional methods. Any limitations on digital assets running smoothly between countries could choke innovation in Africa. Still, it could severely influence people’s routine lives that depend on cryptocurrency as a prime factor for transactions.

In the context of crypto trading volumes and activity in Africa, regulators control the situation and negotiate with abrupt intervention. Nevertheless, various African lawmakers seem to be divided on the most suitable course of action concerning regulatory diplomacy. Assuring that customers are protected is high on the list. Furthermore, there appears to be a group of policymakers intent on restricting any constraints that could hinder this thriving new industry’s continued development.

In April, South African regulators recommended regulations that would inflict strict licensing and monitoring requirements but not recognizing crypto assets as legal tender. Recently, Nigeria’s Securities and Exchange Commission (SEC) recommended guidelines that would handle all crypto assets like securities by default. However, short-sighted regulation could be detrimental to crypto users. Moreover, policymakers’ favourable reaction could promote further mass adoption of cryptocurrency in Africa.

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