Ecobank Report Says Cryptocurrencies Present in 36 African Countries
A report released by the pan-African bank, Ecobank Transnational Inc., has discovered that despite cryptocurrencies exerting a significant presence in all the 36 African countries where the company operates, just South Africa and Swaziland have adopted a “generally favorable and permissive [regulatory] stance” regarding cryptocurrencies.
‘Wait and See’ Approach Regarding Cryptocurrencies
Ecobank’s survey finds that “As in many other parts of the world, African governments and central banks are mostly adopting a ‘wait and see’ approach with regards to}regulating cryptocurrencies.” The report says that “Many African governments and regulators recognize both the risks and the potential positive impacts of cryptocurrencies,” and that some African governments have shown an “appreciat[ion of] the difference between cryptocurrencies and the underlying blockchain technology.”
Despite such, Ecobank discovers that many African states “have been reticent in authorizing cryptocurrency transactions, and mostly remain apprehensive about the potential risks,” adding that “African countries seem to be looking to their neighbors to regulate and innovate 1st, and learn from their mistakes, rather than being the 1st mover.”
No Discernible Regional Regulatory Trend
The report finds that “To date, there has been no discernible regional regulatory trend, whether favorable or unfavorable.” Ecobank assets that South Africa and Swaziland provide “the most favorable regulatory stances Africa,” whilst only Namibia has sought to prohibit cryptocurrencies.
“With the exceptions of Cameroon, Rwanda, and Senegal, no other Francophone government or central bank has made a policy statement on virtual currencies,” the report states, adding “Those countries that have made a statement have indicated that cryptocurrencies operate in the grey area between legality and illegality. In these countries, the best a cryptocurrency innovator can hope to achieve is a ‘no objection’ to trialing the product rather than formal authorization and (ultimately) legislation to match. The consensus in these countries is that for Africans, although cryptocurrencies are generally not prohibited, consumers use them at their own risk and they have been warned about the potential consequences by regulators.”
African Citizens Becoming “Overexposed to Cryptocurrency”
Ecobank emphasizes that many African states have issues regarding the potential systemic risk that could result from many citizens investing heavily and getting overexposed to the cryptocurrency markets. “African governments worry that if its citizens become overexposed to cryptocurrency investments, the repercussions of another crash could be felt in the broader economy, therefore their skepticism of licensing their use,” the report concludes.
The report states that “Cryptocurrencies such as Bitcoin, Ethereum and Ripple produced waves in 2017 and early 2018, not just in terms of their creativity, but also of their role as highly speculative assets. […] “Unfortunately, the spectacular rise and fall in the traded worth of cryptocurrencies has drowned out broader conversation on the potential benefits this new technology could provide. The transformational impact that could be delivered by tokenizing services and products on the blockchain has been compared to that of the Internet. Crypto tokens and currencies could allow consumers to transact instantly, cross-border and for free, provide them with KYC-compliant digital IDs, and incentivize their behavior and modify the way they engage with governments & service providers.”