Is it time for Africa to regulate Bitcoin?

Is it time for Africa to regulate Bitcoin?

By Prince Kurupati

In a continent that has for long been dogged by cash and liquidity challenges, one would think any probable solution would be welcomed and embraced as it emerges but alas in our beloved Africa, we tend to wait until everyone else (and I mean everyone) adopts something before we do.

Bitcoin is a digital currency anonymously founded in 2009 that works in as much the same way as conventional currencies. Since 2009, Bitcoin has been rising in value steadily before astronomically hitting dizzy heights in the second half of 2017. In its first couple of years, many people around the world were sceptical on Bitcoin but as the years passed, many started to embrace and adopt this digital currency.

Despite Bitcoin’s high uptake rate among individuals and corporates globally, only a few namely Canada, Malta and at one stage China regulated and accepted Bitcoin as a legal medium of exchange. However, as countries such as the US, UK and Australia have the highest rates of Bitcoin uptake; we are inclined to forgive the governments of these countries as they have some of the world’s most stable economies and strong currencies. The same however cannot be said of Africa, a continent that has struggling economies at various stages of underdevelopment and a continent that has some of the world’s most highly volatile and inflatable currencies, others like Zimbabwe not even having their own currencies.

Countries in Africa cite different reasons they have not and are currently not considering adopting Bitcoin. However, one of the most cited reasons is that Bitcoin opens up avenues for inter alia the financing of terrorism and money laundering. Notwithstanding the fact that terrorism and money laundering are two evils that need to be weaved out especially the former in North and West Africa, it seems in this case that the positives far outweigh the negatives.

Bitcoin and its underlying technologies’ positives include the potential to facilitate faster transactions, reduce payment costs, reduction in third-party seizures, fully compatible with mobile and allow user anonymity. Juxtaposition the positives and negatives, one would say it’s now time for Africa to start regulating Bitcoin.

A case-by-case study reveals that most African states haven’t yet formulated policies, laws or regulations specifically relating to Bitcoin. Below we look at some selected countries and how their governments view Bitcoin and its underlying Blockchain technology.

South Africa

Just like most states, South Africa has not explicitly restricted or banned Bitcoin but it has shown some disdain by issuing a public notice through the South African Reserve Bank warning the public on the dangers of using Bitcoin. The South African government, however, became a signatory to the Bitcoin Scaling Agreement in August 2017 and many Bitcoin investors saw this as the first step by the government in warming up to Bitcoin.

Kenya

Kenya took the same step taken by South Africa in issuing a public notice warning the public from using Bitcoin. It went a step further by explicitly restricting banks from providing loans to start-ups with interests in Bitcoin or any other cryptocurrencies. Despite all this, Kenya remains the largest volume trader of Bitcoin on the African continent.

Zimbabwe

Officials from the Reserve Bank of Zimbabwe insist that transacting using Bitcoin in Zimbabwe is illegal though there are no legal provisions to that effect. This has left a gap exploited by many people in this country that has been bedevilled by years of hyperinflation, a weak currency and a limited access to financial access. Zimbabwe’s Bitcoin adoption ranks as one of the highest in Africa.

Swaziland

Bitcoin is unregulated in Swaziland but the government of Swaziland recently made it clear that it will soon be opening up the Swaziland market for Bitcoin. Majozi Sithole, the country’s Central Bank Governor while speaking at the Swaziland Economic Conference in 2017 said that the government is seeking expert opinion relating to Bitcoin and soon the digital currency will be open for everyone to use.

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