Author: Staff

The European Union has recently approved the Markets in Crypto Assets (MiCA) regulation, which will have implications beyond its borders, potentially affecting Africa as well. The new law requires the identification of all crypto transactions within the EU and introduces licensing requirements for crypto firms. While the immediate impact will be felt within EU member states, it could indirectly affect Africa’s crypto industry.

Firstly, the MiCA regulation sets a precedent for stricter crypto regulations globally. As African countries navigate their own regulatory frameworks for cryptocurrencies, they might look to the EU as an example. The EU’s adoption of comprehensive identification and licensing requirements could influence African regulators to implement similar measures to ensure financial stability and mitigate risks.

Secondly, Africa has been experiencing significant growth in the adoption of cryptocurrencies and blockchain technology. Many African countries have a large unbanked population, and cryptocurrencies provide an opportunity for financial inclusion and cross-border transactions. However, the EU’s stringent regulations may lead to a more cautious approach from African governments, potentially slowing down the development and innovation of the crypto industry on the continent.

Additionally, the EU’s regulatory stance could impact international partnerships and collaborations between African and European crypto firms. Compliance with the MiCA regulation may become a prerequisite for engaging in cross-border transactions with EU-based companies. This could require African crypto firms to adapt their operations and adhere to the EU’s regulatory standards, potentially adding complexity and costs to their businesses.

However, it’s important to note that African countries have diverse regulatory landscapes and may not uniformly align with the EU’s approach. Some African nations might choose to adopt more flexible and supportive frameworks for cryptocurrencies to encourage innovation and investment in their local ecosystems.

As the global crypto landscape evolves, African countries will need to strike a balance between regulatory oversight and fostering innovation. They will closely observe the EU’s implementation of the MiCA regulation and consider its potential impact on their own crypto industries, taking into account the unique socio-economic factors and developmental goals of the African continent.

The Reserve Bank of Zimbabwe has achieved a successful sale of gold-backed digital tokens, generating 14 billion Zimbabwean dollars worth of transactions. This comes despite a warning from the International Monetary Fund (IMF), highlighting the country’s plan for a gold-backed currency.

The central bank of Zimbabwe recently announced that it received a total of 135 applications, amounting to 14.07 billion Zimbabwean dollars, from interested buyers of the gold-backed cryptocurrency. Based on the official exchange rate of 362 ZWD to 1 USD, the value of the gold sold is approximately $38.9 million.

The sale, which took place between May 8 and May 12, involved crypto tokens backed by 139.57 kilograms of gold. Individual investors were able to purchase tokens at a minimum price of $10, while corporations and other entities had a minimum purchase requirement of $5,000. The tokens come with a minimum vesting period of 180 days and can be stored in e-gold wallets or on e-gold cards.

The primary objective of this initiative is to stabilize Zimbabwe’s economy and address the ongoing devaluation of the local currency in relation to the US dollar. Dr. John Mangudya, the Governor of the Reserve Bank of Zimbabwe, reassured the public that the gold-backed digital tokens are fully supported by physical gold held by the central bank. He emphasized that the issuance of these tokens aims to expand the range of value-preserving instruments available in the economy, enhance their divisibility, and promote wider public access and usage.

Dr. Mangudya outlined two distinct phases for the issuance and utilization of gold-backed digital tokens. In the first phase, the tokens are intended for investment purposes with a vesting period of 180 days. They can be redeemed similarly to existing physical gold coins. In the second phase, the tokens held in e-gold wallets or on e-gold cards can be traded, facilitating person-to-person (P2P) and person-to-business (P2B) transactions and settlements. This versatility allows the tokens to serve both as a means of payment and a store of value.

Despite the success of the sale, the IMF remains cautious about Zimbabwe’s plan for a gold-backed currency. The organization suggests that the country should instead focus on liberalizing its foreign exchange market as a more suitable approach.

Overall, Zimbabwe’s Reserve Bank has demonstrated its ability to attract significant interest in gold-backed digital tokens, generating substantial transactions. The initiative serves as a potential mechanism to stabilize the country’s economy and mitigate currency devaluation concerns, although concerns from the IMF highlight the need for careful consideration and evaluation moving forward.