Africa is witnessing a tremendous increase in cryptocurrency usage, but the regulatory framework continues to be a significant impediment. Blockchain analytics company, Chainalysis, reports that Cryptomania is overtaking Africa at a quicker rate than anyplace else in the globe, with trading volumes increasing by 1,200 percent between 2020 and 2021, the fastest growth rate globally.
In Nigeria, the continent’s biggest economy, one in every three individuals has already acknowledged using cryptocurrency, making it among the world’s top crypto markets in terms of users, according to CoinMarketCap.
Kenya was rated first worldwide in terms of P2P crypto transactions last year, while Nigeria experienced a rapid surge in cryptocurrency usage despite a prohibition on the practice. Young people in the continent are driving the increasing adoption of virtual currencies, which they see as a preferable alternative to their country’s overvalued fiat currency.
However, many responses from African countries have varied from a “Wild West” lack of control to outright restrictions that have proved ineffectual in reducing trade. This is very evident in Nigeria, where the central bank restricted its financial firms from facilitating crypto transactions in 2021, joining the ranks of 23 African nations with implicit or outright restrictions on cryptocurrency trading.
Cryptocurrency Legislation Is Unfriendly In Several African Nations
Leading nations such as Mauritius and South Africa have shown how taking a proactive approach to crypto may result in significant advantages, despite a rife regulatory environment with uncertainty and ambivalence about the technology. A regulatory framework of this kind is likely to attract the attention of institutional investors in the long run.
In addition to carefully following how the United States and other crypto adopters shape the regulatory environment, many developing market authorities may choose to take advantage of sandbox options being developed by financial services companies to test their regulatory frameworks. For example, numerous money transfer companies, such as Western Union, as well as remittance companies, like OFX, Currencies Direct, and World Remit, have devised innovative techniques to conduct “know your customer” checks without the need for tax returns or fixed addresses.
Despite Legislative Obstacles, Cryptocurrency Usage In Africa Soars
Cryptocurrency has grown exponentially despite authorities’ attempts to limit its expansion. When it comes to financial goods, the young in Nigeria, a nation with over 200 million people, has been leading the way in developing solutions that solve the concerns of systemic instability and risk that have been linked with the naira. Ironically, the destiny of young crypto traders in Nigeria is on the shoulders of President Muhammadu Buhari, who is now in office. As a result of the rise of the metaverse and Tiktok, President Buhari remains cautious about the crypto preferences of the Nigerian youth.
Last year, immediately after his words inciting violence towards Biafra rebels in the nation’s southeast were removed off Twitter, the authorities banned the social media platform in the country entirely. Reports claim the EndSARS demonstration campaign against police violence, which was partially supported via BTC transactions, had a role in bringing about the ban on cryptocurrency.
Since Cryptomania is not a transitory phase, the crypto community hope that future market leaders will reconsider their positions toward cryptos. In Nigeria, the elders believe that cryptocurrency is a danger to the country’s stability. This reluctance is also expressed in the United States, although authorities are focusing on measures to foster a stable market instead of simply prohibiting the latest financial phenomena.
