Table of Contents
The continent of Africa is a cryptocurrency frontier. This ground-breaking technology provides transparency and opportunity, paving the way for a new Africa. It’s already happening in major ways there. On Google Trends, African nations frequently appear in the top ten searches for the keyword “cryptocurrency.””
Nigeria, Kenya, and South Africa are among the world leaders in peer-to-peer cryptocurrency trading, according to the 2020 Global Crypto Adoption Index from blockchain analytics firm Chainalysis. Nigeria had weekly peer-to-peer volumes of $5 million to $10 million, according to the index. Kenya and South Africa came in second and third, respectively, with weekly averages of $1 million and $2 million.
According to the United Nations, cryptocurrency ventures in Africa include the Luno Exchange, located in South Africa, which was founded in 2013 and has 1.5 million clients in over 40 countries.
Abra in Morocco and Malawi, South Africa has GeoPay, Zimbabwe has BitMari, and Africa with Kobocoin are some of the most popular cryptocurrency-based remittance services on the continent.
The fact that Africa has the youngest population of any continent, with 226 million individuals aged 15 to 24, is fueling the transition to crypto. And it’s growing: Africa’s youth population is predicted to multiply by two by 2045. By that time, Africa’s workforce will have surpassed that of the rest of the globe.
Many Africans, however, do not have access to the global financial system. That is why it is critical to allow Africans to have a voice in their financial future. Crypto returns power to the people by establishing a transparent environment in which trust may develop.
South Africa And Its Approach To Crypto
South Africa has formally adopted cryptocurrency trading and investment legislation, with the country’s financial and capital markets officials anticipating a surge in cryptocurrency activity.
This is unusual in comparison to much of the rest of Africa. Central banks in a number of other countries are urging commercial banks to avoid handling transactions involving crypto assets.
Despite a spike in trading activity, South Africa, Nigeria, and Kenya are currently among Africa’s top markets for bitcoin and other cryptocurrencies trade and investment. According to one study, Nigeria was the continent’s “leading in peer-to-peer bitcoin trading in the nation.” in the first quarter of 2021, $99 million worth in transaction volumes, while Kenya and Ghana, in second and third place, had $34.8 million and $27.4 million in trade volumes, respectively. With $25.8 million, South Africa came in fourth.
The Need of Regulation in African Crypto Markets
Because conventional crypto exchanges and other open platforms are having difficulty resolving payments via banks due to a lack of regulation in these large marketplaces, consumers are turning to peer-to-peer transactions and underground trading alternatives.
The UN’s Africa Renewal journal this month stated that this scenario is prevalent across Africa, underlining that “given the continuously changing nature of the cryptocurrency world, one of the major concerns is a lack of adequate regulation” in several African nations. According to the study, “regulation is exactly what the industry needs the most.”
South Africa, which boasts the continent’s most sophisticated financial industry, is taking a different route, predicting a surge in crypto trading in the country and throughout the continent, according to financial and capital markets. Cryptocurrencies are already recognized as an investment and taxable asset in the government.
A new intergovernmental working group tasked with developing new policies stated, that Crypto assets cannot remain outside of the regulatory gaze of South African regulators.
The Rise of Cryptocurrency in South Africa
The fast growth of cryptocurrency trading in South Africa, as well as an increase in ransom demands in cryptocurrency, appears to be driving the nation to regulate virtual assets.
According to a study from the working group, daily crypto asset trading prices in South Africa were “exceeding $145 million for the first time” in January 2021. The new rules are aimed at increasing transparency and reducing the usage of cryptocurrencies for illegal purposes.
The new laws will cover customer identity and verification, customer due diligence, preserving records of client and transactional information, and monitoring of suspicious and unusual behaviour in order to combat money laundering and terrorism funding. For “cross-border financial movements,” the South African Reserve Bank will keep a careful eye on crypto assets and service providers.
Despite these efforts, South Africa still intends to limit banks and other financial institutions’ exposure to crypto assets, citing the possibility of “spillover” and financial stability issues under the new regulatory framework.
Financial regulators in Kenya, Nigeria, and Zimbabwe have already prohibited banks from completing transactions of cryptocurrency, leading to the use of mobile money and other digital payment methods to settle bitcoin transactions.
Mobile money platform, according to a video uploaded on YouTube by LocalBitcoins–a trading platform for peer-to-peer transactions– In Kenya, M-Pesa is the most popular payment method, followed by Pesalink, a payments transfer network, with 17,000 crypto traders on the site at the end of February this year.
Transforming the Future of Africa with Crypto
Africa is one of the few countries on the planet that can begin from scratch and implement any new technological advancement and idea that comes to fruition today without destroying old infrastructure. Major governments and regions, from the United States to Europe to
China, are unable to implement cutting-edge technology without demolishing and rebuilding all that has previously been constructed.
Africans are very inventive, and the younger generation is brimming with business ideas. Many, however, lack entrepreneurial skills since they are forced to scrape by with occupations that allow them to feed their family by the culture in which they live. Instead, they require room to pursue their ambitions. They’ve got huge plans. And crypto is the basis on which those incredible ideas may be realized.
Decentralization and cryptocurrencies will enable the development of a new financial framework on the continent, enabling entrepreneurs to establish and execute their companies digitally across borders.
When you consider the tremendous potential of Africa’s most precious resource—its people—combined with the continent’s natural assets, you can see why this is such an exciting time for the continent.