The growth of cryptocurrencies in Africa is happening at a very fast pace. On the regulatory and adoption spotlight is South Africa, Nigeria, Ghana and Kenya, and others.
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Africa has now become a continent of considerable interest in cryptocurrency. In Africa, there is a substantial demand for bitcoin and other cryptocurrencies.This is propelled by its youthful and rapidly expanding populations and the need for a hedge against inflation.
Africa’s leading economies like South Africa, Nigeria, Zimbabwe, Kenya, and Ghana are the top five African countries with the most demand for Bitcoin and other digital currencies.
Let’s examine the highlights of the regulatory initiatives that contributed to the rate of adoption of cryptocurrencies in some of the leading African economies.
South Africa
Major regulations stormed the South African crypto market in 2023. This includes the reinforcement on the taxing of cryptocurrencies, an innovation that has been in existence since 2018 and recognizing them as crypto assets.
The South African Advertising Regulatory Board in 2023 also introduced a fresh clause within its regulations for the cryptocurrency sector. This addition aims to safeguard consumers from unethical advertising practices. Concurrently, the country’s financial regulator, the Financial Sector Conduct Authority, has mandated that all cryptocurrency exchanges must secure licenses by the conclusion of 2023.
To further advance the widespread usage of crypto in South Africa, South African grocery retailer Pick n Pay began accepting Bitcoin in all its 1,628 stores after a three-month pilot testing phase in 39 locations.
Nigeria
Nigeria continues to rank amongst the world leaders in crypto adoption. It is second on the global crypto adoption index with a young and tech-savvy population increasingly turning to cryptocurrency to meet their financial needs.
A few new innovations were introduced into the Nigerian crypto in 2023, the major ones being green lights from the regulatory bodies. The Central Bank of Nigeria (CBN) removed the restrictions that it placed on Nigerian banks from facilitating cryptocurrency transactions in 2021.
The CBN recognized that the increasing global demand and adoption of crypto makes it unjustifiable to maintain the stringent restrictions imposed on financial institutions.
The Nigerian Securities and Exchange Commission (SEC) has started processing crypto exchange and custodian license applications. However, many popular exchanges, like Binance, have not received a license. Despite this, many peer-to-peer exchanges operate in Nigeria today.
The SEC also signaled support for tokens backed by assets like equity, debt or property known as real-world assets tokenization efforts, except for cryptocurrencies like Bitcoin and Eth.
In May 2023, the Finance Act, which introduces a 10% tax on gains from the disposal of digital assets, including cryptocurrencies, was signed into law.
Kenya
Cryptocurrency adoption has positioned the East African nation as a potential technology hub in Africa.
In May 2023, Kenyan legislators contemplated the introduction of a proposed bill suggesting a 3% tax on transfers involving cryptocurrencies and NFTs, along with a 15% tax on monetized online content.
The Kenyan government entered into an agreement with the Abu Dhabi-based blockchain platform Venom Foundation to establish a hub for blockchain and Web3 technologies in Africa.
In November 2023, the Blockchain Association of Kenya announced that the National Assembly’s Departmental Committee on Finance and National Planning has directed it to prepare the first draft of “what could become a virtual asset service provider’s bill.” Making Kenya the first country to have a crypto regulation drafted by industry experts.
Central African Republic
The Central African Republic has been at the forefront of friendly crypto regulation. In the spring of 2022, the CAR became the first African country to adopt Bitcoin as legal tender. However, this was short-lived in as the government began its crypto token project, Sango Coin, days after the Bitcoin law was enacted.
In January 2023, the CAR set up a 15-member committee responsible for drafting a bill on using cryptocurrencies and tokenization in the region. In August 2023, the CAR extended its Sango blockchain project to tokenize its land and natural resources.
Ghana
Ghana has slowly become a significant player in the crypto industry. So far, they have experienced minimal interference from the government or central bank. Unlike other regions, Ghana has embraced cryptocurrencies without encountering substantial regulatory obstacles.
According to a report from blockchain analytics platform Chainalysis, Ghana has the potential to match the crypto adoption levels seen in Kenya and Nigeria, ranking 11th and 19th, respectively, in the Global Crypto Adoption Index.
While the Ghanaian securities regulator has formed a task force to enhance its capacity for regulating crypto assets, the absence of established cryptocurrency regulations poses a challenge. Regardless of the lack of clarity, Ghanaian residents continue to actively trade and invest in cryptocurrencies, prompting the regulator to explore ways to safeguard crypto users.
As Africa’s engagement with and contributions to cryptocurrency continue to evolve rapidly, the developments observed in 2023 suggest that 2024 is poised for further advancements in crypto across the African continent.
