Last week, the Finance Minister of Uganda, Matia Kasaija, made known the government’s official position on cryptocurrency transactions. According to him, the government does not recognise cryptocurrencies as legal tender, hence, Ugandans that invest/transact with it do so at their own risk and the government will not be held responsible.
This is an echo of the stance of several other African governments on the issue of cryptocurrencies.
One of the important reasons why cryptocurrencies are very popular and have continued to grow immensely is the fact that they are, to a large extent, not susceptible to government regulations.
Unlike fiat currencies, they cannot be physically owned or transferred and do not depend on any government-owned financial body to thrive.
As a result, many governments, regulatory agencies and financial institutions around the world are still seeking to understand the way it works and how best to regulate it.
And Africa is not left out. Some African governments have been trying to understand, regulate and utilise the digital currencies and their potential for their economies.
Take for example South Africa, Rwanda and Kenya. In South Africa, a blockchain company, Bankymoon, has been selected by the central bank of the country to test out digital currency regulations as it wants to begin to experiment with the available options. Similarly in Kenya, the country is exploring the benefits and challenges of the blockchain technology while Rwanda is working on rolling out a digital currency.
On the other hand, most African governments have been more rigid in their opinions of digital currencies and called for caution on the part of its citizens as regards cryptocurrencies. Countries in this list include the continent’s largest economy, Nigeria.
Despite no regulation issued by the Central Bank of Nigeria, regulators have come out against the use of cryptocurrencies saying there is the risk of users falling prey to fraudsters. This is the stand of other Africa countries like Botswana, Morocco and now Uganda joins this list.
Many governments also have the underlying fear that cryptocurrency might cause a disruption of the banking industry.
Despite this, the cryptocurrency wave is blowing over the continent rapidly and is being embraced. Recently, South Africa–based Luno Exchange announced it now has over 3 million users from all of its markets. Last year, Nigerian cryptocurrency app, BuyCoins, announced that it processed over N500 Million worth of cryptocurrencies in the space of 3 months.
All these indicate that there’s a great potential for African countries to develop regulations governing the use of cryptos.
Perhaps, African governments that haven’t done so might want to consider embracing the innovation. They could get themselves equipped with the knowledge of the blockchain network to formulate the appropriate regulations.
Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!