Moving Slowly Towards Cryptocurrencies

The South African Reserve Bank issued guidance a few months ago which made it clear that the national bank sees cryptocurrencies as an asset – maybe one to be treated with care to avoid criminality, but still as a welcome new guest at the financial table. Following El Salvador’s decision earlier this year to accept Bitcoin as a national currency, the Central African Republic has recognised Bitcoin as a legal tender. In Nigeria, the SEC has issued new cryptocurrency regulations establishing that all digital assets are classified as securities. The circular entitled, ‘New Rules on Issuance, Offering Platforms and Custody of Digital Assets,’ establishes the regulatory framework for cryptocurrency within the country. There has been both applause and criticism regarding the new regulation, but regardless, Nigeria is adopting a fresher approach to cryptocurrency than it had in the past.

In June, Ethiopia’s central bank issued a statement saying that crypto business in the country is illegal, but now the central bank seems to have reversed this decision, instead requiring cryptocurrency operators to register with the national cybersecurity agency —the Information Network Security Administration— within 10 days. This move by the government to acknowledge the industry is driven by a desire to be proactive in protecting citizens from crypto-related cybercrime. While African countries acknowledge the rising threat of cyber insecurity in the continent, none has laid down measures to mitigate against cyber-attacks hidden in online crypto marketplaces. Ethiopia wants to lead on this front. Ethiopia is fast catching up with dominant players such as Nigeria, Kenya, SA, and Egypt. With 1.8 million Bitcoin traders, Ethiopia ranks seventh in Africa in crypto holding capacity.

Meanwhile, the latest Chainalysis report indicates that global losses arising from cryptocurrency scams rose by 60% in the first 7 months of this year to $1.9 bn, propelled by a surge in funds stolen from decentralized finance (DeFi) protocols.