Recently prominent global institution International Monetary Fund (IMF) reported calls for more regulation of crypto markets within Africa. Noteworthy is that the African region is among the one of the fastest growing markets around the world.
In a blog posted on 22nd November, IMF cited several reasons for its acknowledging crypto regulations.
Bankruptcy filing of FTX like behemoth crypto exchange raises concerns. The Bahamian crypto exchange’s collapse brought up a ripple effect that went on to make an impact on other crypto firms as well as cryptocurrency prices.
The expected fluctuations in crypto assets prices made the global institution to look over the matter. The recent calls for protection of retail investors and crypto users within the country through regulations.
In addition, the blog noted that the risks posed by the crypto assets are clearly visible and it seeks regulation. This way, a balance could be situated between risk and innovation from the burgeoning technology. If crypto gets recognition as a legal tender within the region—accepting crypto payments—it would pose a much greater risk.
Further it went on to add that authorities and lawmakers also have concerns around the use of cryptocurrencies. They have skepticism if the assets would be used for illicit transfer of funds and dodge the capital outflow prevention rules. Growing acceptance and use of crypto could result in decreasing the monetary policy’s effectiveness. It will end up creating risks on financial and macroeconomic stability.
The IMF report noted that Kenya, Nigeria and South Africa are the regions with the highest number of crypto users. Meanwhile, about one-fourth of sub-Saharan African countries have a formal crypto regulation region. About two-third of them have regulations along with several restrictions. Moreover, Cameroon, Lesotho, Sierra Leone, Ethiopia, Tanzania and the Republic of Congo like countries have completely banned crypto assets within their jurisdiction.
Prominent on-chain data analytics firm, Chainalysis reported from 2020 to 2021, the crypto crypto market in Africa witnessed about 1,200% growth in value. Kenya, Nigeria, Tanzania and South Africa remain the regions with high adoption among all.
Earlier Ghana was reported to run a pilot to test the central bank digital currency (CBDC) project within the region. Bank of Ghana executive Kwame Oppong said the CBDC initiative of the country intends to encourage more financial inclusion. The country has potential of achieving crypto adoption as much as Kenya and Nigeria has.
Chanalysis reported in its Global Crypto Adoption Index these countries in 11th and 19th position.
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