A Look into the Cryptocurrency Regulations in Africa

As the world embraces the the blockchain technology and the cryptocurrencies that come with it, the African countries however, show an intimidated approach towards it; they either have not given any public stance regarding cryptocurrencies, or have it under a strict watch. It is only in some cases, that countries have a favorable and a permissive stand towards it.

A report published on August 1 by the Togo based Ecobank elaborates in quite a detail the stance of Africa in the crypto world. According to the report, most of the countries are taking a “wait-and-see” approach, observing their neighbor states before giving any official stance on the technology and the cryptocurrencies.

According to the report:

“they (countries) have been reticent in authorising cryptocurrency transactions, and mostly remain apprehensive about the potential risks. African countries appear to be looking to their neighbours to regulate and innovate first, and learn from their mistakes, rather than being the first mover.”

The 30 countries that were surveyed, fall in a spectrum, with over 20 countries having issued no official stance about cryptocurrencies. Only one – Nambia has claimed cryptocurrencies as illegal. On the right extreme of the spectrum, countries like South Africa and Swaziland show interest and keep a favorable atmosphere towards the adoption of the cryptocurrencies. In the middle lie countries like Ghana and Senegal which show attempts to explore the digital assets to gather its benefits, while some like Zimbabwe and Malawi warn their citizens about the dangers of cryptocurrencies.

The report also includes a helpful and an insightful map for regulation across the continent.

Looking at the greener part of the map, South Africa is perhaps very keen on regulating the use of cryptocurrencies. Its government began working with a blockchain company, Bankymoon in July 2017, to create a “balanced” approach to bitcoin regulation; in addition to the South African Revenue Services which is exploring proper ways to tax cryptocurrency transactions and investments. More recently, in April, the South African Revenue Services required the citizens to declare “all cryptocurrency-related taxable income in the tax
year in which it is received or accrued.” On the other hand, South Africa’s activities in the crypto world are also increasing, with companies like LunoSygnia and others actively working in the field.

Swaziland has also shown a lenient hand over regulations on cryptocurrencies as it tries to embrace the technology. In an economic forum, the Central Bank of Swaziland took an optimistic stance saying: “If this (cryptocurrencies) is innovation, we do not want to stifle it. We want to learn more about it.”

Countries that lie in the yellow region of the map, although are not particularly having any public stance on cryptocurrencies, also remain unsure about its regulation. Many among these, like Ghana and Senegal, although do not yet consider cryptocurrencies as legal assets, however, there have had been an interest by the governing bodies of the states in promoting cryptocurrencies. For instance the Securities and Exchange Commission of Zambia exclaimed: “We at the Commission believe that the emergent technology on which cryptocurrencies and other related digital assets/products are based may prove to be positively disruptive,
transformative and efficiency enhancing.”

Others like Rwanda and Zambia are also seeing an increased interest in the digital assets by their people, which is why the governments are keen on exploring cryptocurrencies; however, as volatile cryptocurrencies can be, these countries are not as yet ready to say anything big regarding its regulation, whether that may be banning the cryptocurrencies, or taking steps to appropriately adopt it.

The countries in the peach color are more skeptical about cryptocurrencies. Although without any official stance on the matter of cryptocurrencies, there have had been instances where notable figures of the countries have advised their people to remain wary of them. The Kenyan Central Bank have stated: “bitcoin and similar products are not legal tender nor are they regulated in Kenya. The public should therefore desist from
transacting in bitcoin and similar products.”

Similarly the Malawian authority warned its citizens about getting scammed through cryptocurrencies. On the similar note, Uganda has also strictly warned its citizen regarding crypto coins, the Bank of Uganda released a statement saying that anyone using cryptocurrencies “is taking a risk in the financial space where there is neither investor protection nor regulatory purview.” All in all, its hard to say that this region of the continent will approach cryptocurrencies in zeal.

On the extreme end, Namibia has outlawed digital currencies. Under its Exchange Control Act of 1966,  the country “does not make provision for the establishment of virtual currency exchanges or bureaus in Namibia.” The Bank of Namibia also released a position paper in September 2017 in which it stated: “In addition to the bank not recognizing virtual currencies as legal tender in Namibia, it also does not recognize it to be a foreign currency that can be exchanged for local currency. This is because virtual currencies are neither issued nor guaranteed by a central bank nor backed by any commodity”

Despite the overall mixed stance of Africa on crytpocurrency regulation, the continent is seeing a boom in the use of cryptocurrencies. For example, in Zimbabwe, regardless of the central authority not recommending the use of the digital currency, a large proportion of people are involved in crypto related activities. Although, generally not entirely illegal, nor entirely legal, Africans are using cryptocurrencies, but at their own risk.

Qirat Ayaz

Passionate about robots and how the robotics is changing everything around us. Writes about startups in the blockchain space. Contact the editor at editor.startups@blockpublisher.com

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