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Opinions

IMF Cautions Bitcoin Usage As Legal Tender

In a recent report, the International Monetary Fund (IMF) expressed deep concerns about the risks associated with cryptocurrencies, particularly Bitcoin, and issued advice to central banks against accepting them as legal tender. While cryptocurrencies offer a decentralized means of transferring value without intermediaries, their extreme volatility makes them unsuitable for direct use in payment services.

The IMF emphasized the need to protect fiat currencies from potential threats posed by cryptocurrencies and urged central banks to avoid allowing crypto assets to directly compete with established fiat currencies. Such competition could introduce financial stability risks and exacerbate inflationary pressures, which could have severe implications on countries’ economic health.

Of particular concern is the practice adopted by some Governments, including El Salvador and the Central African Republic (CAR), of accepting Bitcoin as legal tender. This approach raises significant concerns for the IMF, as it may introduce additional challenges, including financial instability and rapid inflation. The IMF had previously cautioned against these countries’ decisions to adopt cryptocurrencies as legal tender, citing potential threats to fiscal sustainability, consumer protection, financial integrity, and overall stability.

As cryptocurrencies gain popularity globally, including in Africa, the IMF’s concerns have implications for the continent’s economic landscape. While cryptocurrencies offer potential benefits, such as financial inclusion and faster cross-border transactions, their volatility and potential impact on local currencies demand careful consideration.

Many African countries face unique economic challenges, including currency depreciation, inflation, and underdeveloped financial infrastructures. Introducing cryptocurrencies as legal tender without adequate regulatory frameworks and safeguards could exacerbate these issues and lead to financial instability. Thus, central banks in Africa should heed the IMF’s advice and tread cautiously when considering the acceptance of cryptocurrencies as legal tender.

The IMF has also encouraged countries in Africa to modernize their tax collection systems to encompass the crypto sector. Properly regulating and taxing crypto businesses and related activities will ensure that governments can effectively address potential revenue losses while fostering responsible growth in the crypto space.

As the adoption of cryptocurrencies continues to evolve in Africa, it is crucial for governments and policymakers to strike a delicate balance between embracing innovation and safeguarding the stability and reliability of their fiat currencies. Implementing clear and robust regulations will be essential in harnessing the potential benefits of cryptocurrencies while mitigating the associated risks, paving the way for a more sustainable and inclusive financial future in the region.

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Business

Nigeria ends 3-year ban on naira payments for remittances

In a significant move, the Central Bank of Nigeria (CBN) has reversed its November 2020 decree, allowing Nigerians to receive remittance payments in the naira, the U.S. dollar, or the eNaira, the country’s digital currency. This comes amid a 20% dip in half-year remittances to Africa’s largest economy. The CBN hopes that offering the option of open market rates for remittances will motivate more people to use official channels, thereby increasing remittance inflows.

Previously, the ban on naira remittances aimed to simplify and improve the administration of diaspora remittances, but it limited options for beneficiaries. With the harmonization of exchange rates, the disparity between official and parallel market rates has been addressed, making official remittance channels more attractive.

While the CBN has also opened remittances through the eNaira, the digital currency has yet to gain significant traction. Despite Nigeria’s world-leading digital asset awareness and high Bitcoin adoption rates, many remain apprehensive about the eNaira, opting for other payment methods like cash or bank transfers.

The latest policy shift is expected to create a positive impact on remittance inflows, bolstering Nigeria’s position as a key player in remittances in Africa. By offering more flexibility and choices, the CBN aims to channel remittances through official channels, ultimately contributing to the country’s economic growth and financial stability.

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Opinions

Nigeria Leads Crypto Interest In Africa In H1 2023-Study Reveals

Nigeria has emerged as the leading country in Africa in terms of crypto interest, according to the recent Coingecko Africa crypto report. The report reveals that Nigeria holds a substantial 66.8% share of the continent’s crypto interest, which is nearly eight times higher than the next-ranked country, South Africa.

This latest data from Coingecko reinforces Nigeria’s position as Africa’s top crypto nation, not only in terms of user curiosity but also in traded volumes. The report highlights several factors contributing to Nigerians’ unparalleled affinity for crypto, including poor traditional finance infrastructure, high inflation, and currency depreciation.

During the period between January 1 and June 4, no other African country displayed a level of interest in crypto exceeding 10%. South Africa, the second-highest-ranked country, recorded an 8.36% interest level during the same period. Morocco, which made headlines for imprisoning a crypto trader in 2021, secured the third spot with 5.43% interest, closely followed by Ghana at 5.24%. Egypt, grappling with inflation, rounded up the top five with a crypto interest level of 2.74%.

The data provided by the report indicates that South Africa, Morocco, Ghana, Egypt, and the Ivory Coast collectively accounted for 23.8% of the continent’s crypto interest year-to-date. Furthermore, the report suggests that these top six countries represented over 90% of Africa’s overall crypto interest during the review period.

Interestingly, the findings reveal that only eight countries exhibited a crypto interest level surpassing 1%. Among the surveyed African countries, South Sudan, Sierra Leone, and Mozambique demonstrated the least interest in crypto, according to the data.

Overall, the Coingecko Africa crypto report underscores Nigeria’s dominant position in the African crypto landscape, shedding light on the key drivers behind its population’s enthusiasm for cryptocurrencies. As crypto continues to gain momentum across the continent, it remains to be seen how other countries will navigate this evolving financial landscape.

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Business

CBN Upgrades The eNaira With NFC Feature And Targets University Adoption

The Central Bank of Nigeria (CBN) has taken a significant step in advancing the eNaira by introducing Near Field Communication (NFC) technology. This upgrade aims to expand the usability of the eNaira beyond smartphones and internet access, benefiting individuals without such devices.

NFC is a wireless communication technology that enables the exchange of data between devices within a short-range distance of up to 10 cm. With the integration of NFC, eNaira wallet owners can conduct financial transactions with minimal human contact by utilizing tags attached to their phones.

During an event at the University of Abuja, Mr. Joseph Angaye, a Deputy Director at the CBN, expressed the bank’s commitment to engage students in adopting the eNaira. He emphasized the additional services provided by the eNaira, including the ability to facilitate payments even without a network connection, which is made possible through the NFC feature.

Angaye highlighted the evolution of the eNaira since its inauguration by former president Muhammadu Buhari nearly two years ago, positioning it as a world-class payment system instrument. He further explained that the CBN has achieved numerous milestones and continues to improve the functionality of the eNaira.

The engagement with university students stems from valuable feedback received from various stakeholders. Nigeria is one of the early adopters of the Central Bank Digital Currency (CBDC) concept globally, and the CBN has garnered extensive experience that the world is keen to learn from. The CBN has been generous in sharing its knowledge with organizations such as the World Bank, the IMF, and central banks worldwide.

Angaye clarified that the eNaira is not intended to replace physical currency or existing payment system infrastructure. Instead, it aims to enhance the financial system, address challenges within the payment system infrastructure, and complement existing services. The eNaira provides a platform for banks and service providers to offer more efficient services, promoting financial inclusion and reducing congestion and downtime associated with transaction processes.

The CBN also aims to make the eNaira the preferred method of revenue collection in tertiary institutions across Nigeria. During the event, Prof. Aisha Sani Maikudi, the Deputy Vice-Chancellor (DVC) Academics of the University of Abuja, expressed the university’s readiness to collaborate with the CBN in educating Nigerians about the eNaira. The university’s Department of Banking and Finance will dedicate efforts to the eNaira project, with students and staff serving as agents for this initiative.

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DeFi

How to earn passive income with peer-to-peer (P2P) lending

What is peer-to-peer (P2P) lending?

Peer-to-peer (P2P) lending, also known as marketplace lending, is a lending model that connects borrowers and lenders directly through online platforms, bypassing traditional financial intermediaries like banks.

In P2P lending, individuals or businesses in need of loans can create loan listings on a P2P platform to request funding. On the other side, individual investors or institutional lenders can review these listings and choose to fund them based on their risk appetite and desired return on investment.

P2P lending platforms act as facilitators, streamlining the loan application, credit evaluation, and loan servicing processes. They utilize technology to enhance the user experience and match lenders with borrowers. Loans obtained through P2P lending can be utilized for various purposes, including debt consolidation, small business loans, education loans, and personal loans.

The operation of P2P lending platforms is governed by the legal framework of the country they are based in. These platforms must comply with all relevant laws, especially those related to borrower and investor protection, which may vary depending on the country’s regulations.

Examples of P2P lending platforms

LendingClub stands out as one of the leading P2P lending platforms. It offers a wide range of loan options, including personal loans, business loans, and auto refinancing. Zopa is another notable P2P lending platform in the United Kingdom, connecting borrowers and investors for personal loans and investments.

Aave, built on the Ethereum blockchain, represents a decentralized P2P lending platform that enables users to lend and borrow cryptocurrencies based on supply and demand dynamics. It provides various features such as liquidity mining incentives, flash loans, and collateralized borrowing.

How does P2P lending work?

To illustrate the P2P lending process, let’s consider an example involving Brian, who wishes to borrow $10,000 for debt consolidation. Brian begins by submitting a loan application on a P2P lending platform, providing his financial details, and explaining the purpose of the loan. After assessing Brian’s creditworthiness, the platform lists his loan.

Anita, a user of the platform, comes across Brian’s loan listing and decides to fund $1,000 of the loan as it aligns with her investment strategy. As more lenders participate, Brian eventually receives the full $10,000 once the loan is fully funded. Over time, Brian’s monthly repayments, consisting of principal and interest, are distributed among the lenders by the P2P lending network. Brian pays interest on the loan, providing a return on investment for Anita and other lenders.

Here is a step-by-step breakdown of the P2P lending process between Brian and Anita:

1. Brian submits a loan application for $10,000 to consolidate his debt through a P2P lending website.

2. Based on Brian’s financial information and loan purpose, the P2P lending platform assesses his creditworthiness.

3. The platform lists Brian’s loan request, including details such as loan amount, annual percentage rate, and loan purpose.

4. Anita, an investor on the platform, chooses to contribute $1,000 to Brian’s loan after reviewing various loan listings.

5. Once the loan is fully funded by multiple lenders, Brian receives the $10,000 loan amount.

6. Brian makes monthly repayments, including principal and interest, to the P2P lending platform.

7. The P2P lending network collects Brian’s repayments and distributes them to the lenders, such as Anita.

8. Over time, Alice and other lenders generate profits from their investments through the interest payments made by Brian.

By following this process, P2P lending platforms enable individuals and businesses to access loans directly from investors while providing opportunities for lenders to diversify their portfolios and potentially earn attractive returns.

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Business

Binance Finalizes Bitcoin Lightning Network Integration

Binance, the world’s leading cryptocurrency exchange, has successfully integrated the Lightning Network, a popular scaling solution built on top of the Bitcoin blockchain. This integration allows Binance users to utilize the Layer-2 scaling solution for faster and more cost-effective Bitcoin withdrawals and deposits by selecting the “BTC-Lightning” network option.

The decision to incorporate the Lightning Network comes after Binance announced its plan to integrate Lightning nodes into its infrastructure. The move was prompted by a period of increased congestion on the Bitcoin network, which forced Binance to temporarily halt BTC withdrawals. At the time, the Bitcoin mempool had over 420,000 unconfirmed transactions, surpassing the levels seen during the 2021 bull run.

According to Binance, the congestion and subsequent rise in transaction fees largely attributed to the introduction of the BRC-20 token standard on the Bitcoin Ordinals protocol. To mitigate such issues in the future, Binance adjusted its fees and took proactive measures, including enabling BTC Lightning Network withdrawals.

Binance joins other major cryptocurrency exchanges like Kraken, OKX, and Bitfinex in supporting the Lightning Network, further expanding the adoption and usability of this scaling solution within the crypto industry. By leveraging the Lightning Network, Binance aims to enhance transaction efficiency and reduce costs for its users, ensuring a smoother and more accessible experience when dealing with Bitcoin on its platform.

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Business

Venture Capital Investments In Crypto Decline As Interest Rates Rise, Report Reveals


Venture capital firms are showing decreased interest in the crypto space, as revealed by a new report from Galaxy Research. In the second quarter of this year, VC investments in crypto and blockchain firms totaled $2.3 billion, a significant drop from the $8 billion invested during the same period last year. The report attributes the decline to a challenging business environment, higher interest rates, and reduced appetite for long-tail risk assets.

While the overall investment amount decreased, the number of deals in the crypto space increased slightly to 456, compared to 439 in the first quarter. Specifically, investments in companies focused on privacy and security products saw a significant surge of 275%.

Within the crypto sector, startups involved in trading, exchanges, investing, and lending attracted the most capital, amounting to $473 million. Following closely behind were firms in the Web3, NFTs, gaming, DAOs, and metaverse categories, which received $442 million.

Magic Eden, a cross-chain NFT marketplace, was highlighted in the report for securing a $52 million deal, making it the largest NFT investment of the quarter.

Despite regulatory challenges, the report also mentioned that U.S.-based crypto startups continue to garner significant attention from venture capitalists. Around 45% of the capital invested in crypto companies went to U.S. firms, with the United Kingdom and Singapore receiving 7.5% and 5.7% respectively.

The report acknowledged that the decline in VC activity is not exclusive to the crypto industry, as tighter monetary conditions have impacted VC firms’ ability to raise funds for investments across various sectors. Additionally, the report noted that some investors may remain cautious due to the bankruptcies experienced by several venture-backed crypto companies in 2022.

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Business

Telegram Introduces An In-app Crypto Payments

Telegram, a widely used messaging app, has recently unveiled an exciting addition called Wallet, enabling merchants to accept cryptocurrency payments directly within the app. This feature, powered by the Wallet Bot, a third-party service, empowers users to buy, sell, and store cryptocurrencies seamlessly.

Wallet is currently accessible in most jurisdictions, with certain exceptions for countries that impose sanctions on cryptocurrencies or enforce strict financial regulations. It is important to note that the Wallet service operates independently from Telegram. While utilizing the Telegram Web Apps protocol, the Wallet bot and application are developed by a separate entity. To access the payment service, users can employ either the dedicated Telegram bot or visit the official website. However, it is advised to verify the authenticity of the bot’s source before utilizing it.

Wallet users have the flexibility to pay merchants using Bitcoin (BTC), Tether (USDT), and Toncoin (TON). Transactions are processed instantaneously, without any additional fees associated with using the Wallet feature.

It is worth mentioning that Wallet has not yet integrated the Know Your Business (KYB) procedure into its protocol, despite receiving numerous requests from vendors eager to adopt this payment feature. Consequently, potential vendors are advised to exercise caution and ensure compliance with local regulations regarding the acceptance of cryptocurrency payments before proceeding with their applications.

The introduction of in-app crypto payments through Wallet represents a significant development for the cryptocurrency industry. This feature simplifies the process for merchants to accept cryptocurrency payments while providing consumers with more options for online purchases. By enabling direct payments within the messaging app, Telegram contributes to the growing mainstream acceptance and adoption of cryptocurrencies.

In March, Telegram introduced its first USDT transfer feature within the app. This functionality allows users to send and receive the popular stablecoin directly through the messaging platform. Currently, Telegram only supports the Tron-based version of USDT (TRC20), which operates on the Tron blockchain. This integration enables users to conveniently send USDT to friends without incurring any transaction fees.

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Business

Ripple’s XRP Token Surges 96% After Partial Victory In SEC Lawsuit

XRP, one of the largest cryptocurrencies by market capitalization, has witnessed a remarkable 96% surge in price within a single day. This surge came after a U.S. judge ruled that the sale of XRP tokens on exchanges does not fall under the category of investment contracts. The price of XRP reached a high of 93.8 cents, its highest level since March 2022, before settling at 81 cents at the time of publication.

The recent surge in XRP’s price can be attributed to a significant legal development. The District Court for the Southern District of New York stated that the sale of XRP on digital asset exchanges should not be considered as the offering or sale of investment contracts. The court found that the transactions in question did not fulfill the third prong of the Howey test, which determines whether an investment contract exists. This ruling has provided clarity regarding the legal status of XRP, leading to increased investor confidence and subsequent price appreciation.

XRP’s price surge following the court ruling has been noteworthy. The cryptocurrency climbed to a high of 93.8 cents, showcasing its strongest performance since March 2022. Although the price has slightly retreated to 81 cents at the time of writing, it still represents a substantial increase within a short period. This surge demonstrates the market’s positive response to the legal clarity surrounding XRP and highlights the potential for renewed investor interest in the cryptocurrency.

As XRP’s price soared and investors sought to capitalize on its newfound legal status, Uphold, one of the few crypto exchanges where investors can purchase XRP, experienced internment issues. The exchange faced challenges due to the high demand for XRP, leading to potential delays and difficulties in processing transactions. Uphold acknowledged these issues through its official Twitter account, attributing them to the overwhelming demand. It is a testament to the sudden surge in interest and highlights the need for exchanges to scale their infrastructure to handle increased user activity during periods of high market volatility.

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Business

Crypto Crime Down by 65% So Far This Year-Chainalysis Report Reveals

According to a report from blockchain data firm Chainalysis, the world of cryptocurrency has seen a significant decline in crypto-related crime in 2023 compared to the previous year. The data reveals that such criminal activities have dropped by a notable 65% so far this year. Chainalysis based its findings on the analysis of digital asset inflows to illicit entities. These entities primarily include addresses associated with darknet markets or ransomware attackers.

In addition to the decline in illicit activities, the report also highlights a 42% decrease in inflows to “risky entities,” which encompasses high-risk exchanges and mixers frequently used by criminals to launder funds. The overall reduction in crypto crime is occurring despite a market pullback, with illicit crypto transaction volume falling more significantly than legitimate crypto transaction volume.

Chainalysis emphasizes that scams, which have historically been the most profitable form of cryptocurrency-based crime, have experienced a substantial decline in revenue. Compared to the same period in 2022, total scam revenue has plummeted by 77%. This decline is particularly noteworthy because digital asset prices have risen during this time, typically favoring criminal groups. Bitcoin, for example, has more than doubled in value from less than $17,000 per coin in January to its current price of $30,500.

The report stated, “Usually, positive price movements translate to higher scam revenue, likely because increased market exuberance and FOMO make victims more susceptible to scammers’ pitches. But 2023’s drastic scam decline bucks that long-standing trend.”

But despite the fall in scams, ransomware attacks are growing: attackers are on pace for their second-biggest year ever and have extorted at least $449 million through June.