African nations that welcome cryptocurrency Between 2020 and 2021, the cryptocurrency market in Nigeria, Kenya, Tanzania, and South Africa expanded at a combined rate of 1,200 percent, reaching a market value of $105.6 billion (roughly Rs. 775 crores).
The International Monetary Fund (IMF) is interested in the growth trajectory of the cryptocurrency industry in Africa. The IMF recently urged African nations to swiftly enact stricter regulations for the cryptocurrency industry in a blog post. The IMF wants to safeguard investors from monetary risks.
The IMF stated in its post that it is still difficult to control a highly volatile and decentralized system. “Many people use crypto-assets for commercial payments, but their volatility makes them unsuitable as a store of value. Only a quarter of countries in sub-Saharan Africa formally regulate crypto,” said the IMF.
According to Chainalysis, one of the crypto markets with the fastest growth is in Africa. The region continues to be the smallest in terms of transactions, with a peak of $20 billion (roughly Rs. 1,63,006 crore) per month in the middle of 2021.
The IMF reports that South Africa, Kenya, and Nigeria are the countries in the region with the most cryptocurrency users. Early this year, the Central African Republic became the second country after El Salvador to legalize Bitcoin.
Other African regions have also seen an increase in cryptocurrency activity. For instance, the Mara cryptocurrency wallet, which is supported by Coinbase, is prepared to go live in Kenya and Nigeria.
In order to create a special economic zone supported by the cryptocurrency industry, Nigeria and the Binance cryptocurrency exchange are working together.
The IMF does not support or encourage countries to integrate cryptocurrencies into their financial systems.
The international financial organization had earlier this year stated that using Bitcoin posed serious risks to consumer protection, financial integrity, and financial stability because of its high price volatility.
“If crypto-assets are held or accepted by the government as a means of payment, it could jeopardize public finances. Policymakers are also concerned that cryptocurrencies could be used to illicitly siphon money out of the region and circumvent local regulations to prevent capital outflows,” the IMF report said.
In particular, recent studies have suggested that as more countries begin to regulate the crypto sector, the use of cryptocurrencies by criminals to launder money may decline.
Ransomware payments made using cryptocurrency reportedly reached over $600 million (roughly Rs. 13,330 crores) in 2021. But according to a Kaspersky report, Bitcoin will become less valuable as a digital currency for dealing with and paying ransomware.
Currently, six African nations, Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of the Congo, ban the use of cryptocurrencies. All banks in Zimbabwe have been told to stop processing transactions, and a local cryptocurrency startup in Liberia has been told to stop operating (implied bans).