Sat Nov 26, 2022 ▪ 12:00 PM ▪
4
min read – through
The crypto market in Africa is showing some growth and the first regulatory questions are already emerging. After the collapse of FTX and all the consequences that followed, the urgency to regulate the sector is more pressing. However, regulating an industry as volatile as virtual currencies remains a real challenge. Especially sincecurrently in Africa, only 25% of countries officially regulate crypto.
The African crypto market: finally real regulation?
Caution is advised as the world’s second-largest stock exchange in terms of trading volume is in disgrace. The failure of FTX accelerated the price decline of bitcoin and some major altcoins like Ethereum. Given the proportions that this bankruptcy has assumed, it is inevitable that the time will come real regulation in Africa.
the crypto market in Africa is the fastest growing in the world according to Chainalysis. However, it remains the one where there are still the fewest transactions. While countries such as Nigeria, Kenya and especially South Africa lead the way and show some consistency in their desire to regulate the sector, many other countries, on the other hand, continue toban cryptocurrency. This register includes Cameroon, Lesotho, Congo and the DRC, among others.
African governments fear the impact the crypto volatilitybecause they can’t be used as stores of value. On the other hand, central banks should no longer have a monopoly on money. What can the monetary policy and somehow compromise financial stability.
While some countries are adopting crypto, they are doing so alone in defiance of community regulations. The most evocative case of this disparity in crypto regulation is CAR’s adoption of bitcoin as the official currency. By deciding to regulate bitcoin and thus crypto, the CAR alienated the Economic and Monetary Community of Central Africa (CEMAC). Indeed, the CEMAC treaty formally prohibits the introduction of any currency other than the CFA franc. Likewise, all crypto transactions within the sub-region are strictly prohibited.
Conclusion
Crypto continues its democratization in the African continent. The African crypto market is growing faster than any other in the world. Nevertheless, the regulatory issue remains in abeyance, despite recent events calling for more caution.
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Cédrick Aimé, graduate student in finance law and experienced SEO web editor, is passionate about cryptocurrencies, trading, etc. He naturally participates in the daily blockchain revolution for better democratization of DeFi thanks to his articles.