The African cryptocurrency market
- Business Insider presents 6 African countries that have completely banned the use of cryptocurrency.
- Crypto use remains a bone of contention in Sub-Saharan Africa.
- This is because of a lack of regulations on the digital currency.
The use of cryptocurrency in Africa continues to be a heated subject for debate.
Simultaneously, Africa happens to be the fastest growing crypto markets, while also being the smallest. This is thanks to the sporadic use of digital currencies on the continent. For example, of the 46 Sub-Saharan African countries, Kenya, Nigeria, and South Africa record a substantial amount of the entire crypto transactions in the region.
Asides the sporadic use of cryptocurrency, African governments also harbor a shared paranoia on the use of a currency with little to no regulations. A very valid phobia given the recent collapse of the world’s third largest crypto exchange FTX, and the subsequent plunge in the prices of Bitcoin, Ethereum, and other major crypto assets.
As a result, the use of cryptocurrency is still a huge bone of contention within many markets in the region. The recent crash of FTX has rekindled the conversation surrounding government regulations on cryptocurrency, and the general public has become more weary of exchanging their traditional currency for a virtual one.
In Africa however, this conversation is most likely going to have little effect, at least in the coming years, seeing as authorities in the region simply share a general mistrust of the blockchain technology. This was evident in the conflict of interest that arose in Nigeria during the #endsars period.
During the #endsars movement, the government of Nigeria placed a ban on the use of cryptocurrency, while the people protested this ban to little effect. If this is any indication, it shows that Africa as a people are ready to embrace the use of cryptocurrency, and are willing to accept the risk, the same risk present in the stock market. While governments are not.
“Policymakers are worried that cryptocurrencies can be used to transfer funds illegally out of the region and to circumvent local rules to prevent capital outflows. Widespread use of crypto could also undermine the effectiveness of monetary policy, creating risks for financial and macroeconomic stability,” according to a report by the International Monetary Fund.
In the same report dubbed the October 2022 Regional Economic Outlook for sub-Saharan Africa, the IMF also noted that two-thirds of Sub-Saharan African countries have implemented some form of restrictions on cryptocurrency and six countries have banned cryptocurrency altogether.
The countries who have placed some measure of restrictions on the use of cryptocurrency were placed under the IMF’s implicit ban section, while those that have completely banned the use of cryptocurrency were placed under the IMF’s explicit ban section.
Below are six of these countries that have explicitly banned the use of cryptocurrency;
- Sierra Leone
- The Republic of Congo