Following the rapid increase in cryptocurrency adoption across the continent this year, the accelerated growth of blockchain technology in Africa has raised concerns over the possible implementation of knee-jerk regulation.
Africa has become a hotbed for peer-to-peer crypto trading this year, with Nigeria and Kenya featuring in the top eight nations in the Chainalysis crypto adoption index.
Crypto payments have become a common feature in many parts of the continent, allowing businesses and individuals to make fast, cost-efficient transactions, increasing productivity in some of the most underbanked communities.
Recently, however, concerns have emerged regarding the reaction from Africa’s financial regulators. The use of cryptocurrency in struggling economies can pose a direct threat to governments and exclusive financial institutions, and many fear that a short-sighted blanket ban or censorship could be on the cards.
Many countries rely on cryptocurrencies for remittances and cross border payments as they make this cheaper and faster than traditional methods. Any restrictions on digital assets moving freely between countries could not only stifle innovation in the continent, but it could seriously affect the day-to-day lives of many that rely on cryptocurrency as a primary medium for transactions.
In light of increased crypto trading volumes and activity in the region, regulators are monitoring the situation and could intervene with abrupt intervention. However, many African lawmakers appear to be divided on the best course of action regarding regulatory diplomacy.
Ensuring that consumers are protected is high on the agenda, but there appears to be a group of policymakers intent on limiting any restrictions that could inhibit the continued development of this thriving new industry.
Following a proposition in April that would see South African regulators implement a firm stance on the licensing and regulation of digital assets, there is excitement around new guidelines proposed by the Nigerian SEC that would determine all cryptocurrencies and digital assets to be considered tradable securities.
Although short-sighted regulation could be a detriment to crypto users, a positive reaction by policymakers could facilitate further mass adoption of cryptocurrency in Africa.
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