Author: Staff

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Business

Kenyan central bank braces for a crypto policy

The Information, Communication, and Technology (ICT) committee of the Kenyan Senate has declared that it is prepared to work with the Central Bank of Kenya (CBK) and other stakeholders to develop the nation’s policy toward crypto assets and companies that provide services for virtual assets. Such a policy, in the committee’s words, “ensures Kenya harnesses the benefits of financial innovation while minimizing the risks” in the country’s use of cryptocurrency assets.

In an effort to establish Kenya’s policy toward virtual asset service providers (VASPs) and “the use of crypto assets in Kenya,” a Kenyan Senate committee recently announced that it has resolved to cooperate with the Central Bank of Kenya (CBK) and other stakeholders.

The Senate’s Committee on Information, Communication, and Technology argued in a statement shared via Twitter that the implementation of such a policy will enable Kenya to reap the rewards of innovation.

“While considering the response received from the CBK regarding the Committee’s inquiry on digital assets infrastructure in Kenya at Parliament Buildings, the Members of the Committee emphasized the need to have a laid down policy that governs the Central Bank Digital Currency and crypto assets in the country to ensure Kenya harnesses the benefits of financial innovation while minimizing the risks,” the Senate tweeted.

Two months after the Joint Financial Sector Regulators’ Forum (JFSRF) stated it would consider forming a technical working group with the charge of recommending the creation of a crypto regulatory framework, the Senate committee made its announcement.

As explained in the JFSRF’s joint communique issued on December 16, 2022, the recommendations will be subsequent to wide consultations and deliberations across the financial sector and other relevant stakeholders.

The five-member Kenyan regulators’ forum stated that in addition to the recommendation regarding cryptocurrencies, it has also decided to coordinate the creation of a framework that encourages the adoption of new technologies and innovations in the financial services industry. This aids in “improving effective regulation and supervision.”

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Business

Binance expanding in Romania

International crypto exchange Binance is now hiring IT specialists and customer service representatives for its operations in Romania. The top coin trading platform also collaborates with Romanian universities and authorities on a number of educational initiatives.

The third-largest city in Romania, Iaşi, will house the technology hub for Binance, the largest cryptocurrency exchange by trading volume, and it plans to hire a number of experts this year. The hub was established in 2022, and the business is currently hiring employees.

There are already openings for IT specialists in the backend, quality assurance, front-end, and mobile.  Java, typescript, iOS, Android, automation, and framework expertise are required. 

Binance Country Manager for Romania Ilie Pușcaș stated: “Binance is constantly hiring and developing around the world, and Romania, recognized for its high skills in IT and technology, is an important point on our map”.

“Last year, we opened our first technology hub in the country, in Lași, after consistent discussions with the Romanian government, and this year we are entering a natural stage of growth, in which we want to attract many talents to our new center,” the executive added.

Additionally, Binance is hiring customer service representatives for its Bucharest offices. Its global website has a list of open positions for both the tech hub in Iaşi and the branch in Bucharest.

During a trip to Bucharest in September, Changpeng Zhao, the founder and CEO of Binance, announced the opening of the Romanian office. He met with important figures while there and discussed Binance’s plans to increase direct operations in Eastern Europe.

In addition to its recruitment efforts, Binance has supported numerous educational projects in Romania. To organize courses, webinars, and training in finance and cryptocurrency for Romanians, these are carried out in cooperation with other platforms, academic institutions, and governmental organizations. The company has already held meet-ups in Bucharest, Iași, and Cluj-Napoca.

Similar projects are being worked on by the global exchange in a number of other nations in the region and the former Soviet Union. Earlier in February, Binance committed to assisting Georgia in growing its cryptocurrency industry through conferences and educational initiatives.  It started a blockchain education program in Kazakhstan in December and offered assistance to Azerbaijan with cryptocurrency regulation.

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Business

Crypto Department untouched in Chipper Cash layoffs

Just ten weeks after laying off roughly 12.5% of its workforce (mostly from its engineering team), the African cross-border payments platform Chipper Cash conducted a second round of layoffs last Friday.

On LinkedIn, the business’s VP of revenue announced the breaking news, stating that “all areas” of Chipper Cash’s markets were affected at this time. “Friday was a sad day for Chipper Cash, as many talented people were let go. For my network: there is an incredibly talented pool of individuals across the U.S., U.K., South Africa, Nigeria, Kenya, and more. They are all highly experienced in managing very complex, multicultural teams and projects in fintech. All areas have been impacted, from Recruiting, HR, Marketing, Pricing, Product, Analytics, UX, Research, Legal, and more,” the VP’s post read.

Approximately 100 employees at Chipper Cash were laid off, according to several local news sources. Chipper Cash asserted that the reports are generally accurate despite declining to confirm the precise number of roles affected. The five-year-old payments and cryptocurrency startup has therefore laid off over 150 employees in the last three months in addition to the initial round of layoffs in order to cut costs during a challenging time for private and public tech companies globally.

“The last two years were a period of rapid growth and scaling for us as a business and, to reflect this, our global headcount grew by around 250 people,” said CEO Ham Serunjogi in a statement.

“However, given the macroeconomic climate, we are narrowing our current focus to core markets and products, concentrating our efforts where we know we can thrive. With this hyper-focused prioritization, the reality is that we, unfortunately, need a smaller team at Chipper,” he added.

Additionally, Chipper Cash refuted claims that it closed its cryptocurrency division, which houses cryptocurrency products, one of its three main services along with FX and airtime.

“Chipper is one of the largest crypto platforms in Africa today, and it remains one of our fastest-growing products. We are excited about the future of crypto in Africa and continue to invest in the product,” Serunjogi stated. 

Serunjogi and Maijid Moujaled founded Chipper Cash in 2018 to offer Africans a no-fee peer-to-peer cross-border payment service. The company claims to have more than 5 million customers in Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa, and Kenya. More recently, the startup, which is backed by FTX, has also expanded to the U.S. and the United Kingdom, where it last year enabled peer-to-peer money transfers from both nations to specific regions in Africa. 

The African cross-border payment app revealed in November of last year that it would buy the Southern African fintech startup Zoona from Zambia. And the month after that, in the wake of FTX’s bankruptcy, we revealed that the African fintech had its valuation reduced from $2 billion to $1.25 billion in accordance with documents revealing Alameda’s venture capital portfolio. The African fintech had raised over $300 million from investors such as the now-defunct crypto exchange, SVB Capital, and Ribbit Capital.

Along with Jumia (900 employees), Yoco (15% of its workforce, according to sources), and Luno (35% of its workforce), Chipper Cash joins a list of crypto companies and businesses with an emphasis on Africa that have recently let go of staff.

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Business

JP Morgan opens regional office in Nairobi, Kenya

JP Morgan, the largest bank in the United States and the world’s sixth-largest bank by total assets, has announced opening of a regional office in Nairobi. According to Kenyan media, the move has been hailed by Kenya’s President William Ruto as a vote for Kenya’s emerging success in the global marketplace.

He stated on Twitter that this was a vote for Kenya’s emerging success in the global marketplace and a sign of confidence in Kenya’s economy.

President Ruto recently met with Daniel Zelikow, the Vice-Chairman and Global Head of JP Morgan Public Sector Group in Nairobi, and discussed revising development financing to be more responsive to climate change.

Ruto stated, “We welcome the firm’s expertise in environmental risks that will help Kenya to confront the climate change crisis sustainably.”

Furthermore, the bank also expressed its commitment to serving the needs of its clients while helping to drive sustainable economic growth in the region.

JP Morgan’s decision to set up a regional office in Nairobi comes after the bank’s CEO, Jamie Dimon, announced in 2018 that the bank had hired a special team of bankers to help coordinate and expand the bank’s relationships in Kenya and Ghana. 

According to Jamie Dimon, the CEO of J.P. Morgan, the bank has always intended to increase its footprint in Africa by entering nations like Ghana and Kenya in 2018, however, at the time, local regulators obstructed such ambitions. 

The new regional office in Nairobi will serve as a hub for JP Morgan’s operations in East Africa, and the bank has stated its intention to serve the country, all US multinationals going in, the wealth funds, and universities. The move is part of JP Morgan’s strategy to expand its services globally. The bank already has offices in South Africa and Nigeria.

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Business

Canadian regulators say no to algorithmic stablecoins

The Canadian Securities Administrators (CSA) recently published a notice describing new commitments it expects from crypto asset trading platforms (CTPs) seeking registration in Canada.

The CTPs will enter into a new version of preregistration undertakings (PRUs), which are legally binding documents. Registered CTPs will be contacted by their principal regulators about compliance with the new expectations. 

The new commitments represent investor protections in light of the spate of CTP insolvencies that occurred in 2022, the CSA wrote. The new commitments touch on issues that include segregation of assets, leverage, determination of capital, transparency, and others. 

The notice highlighted, “A prohibition on the part of the CTP in respect of clients buying or depositing Value-Referenced Crypto Assets (commonly referred to as stablecoins) through crypto contracts without the prior written consent of the CSA.”

The notice also explained, “CTPs are prohibited from permitting Canadian clients to enter into crypto contracts to buy and sell any crypto asset that is itself a security and/or a derivative. Staff is of the view that Fiat-Backed Crypto Assets generally meet the definition of ‘security’ and/or would meet the definition of ‘derivative’ in several jurisdictions.” 

The CSA emphasized that it will not expect to provide consent for other types of stablecoin, such as algorithmic stablecoin, either.

While the CSA recognizes use cases for stablecoins such as payments and volatility hedging, it also considers them riskier than fiat currency even those with which the regulator permits crypto platforms to trade. 

The notice stated, “We recognize that VRCAs may be as an on-ramp to deposit assets with the CTP, for the trading of other crypto assets, as a store of value during times of volatility in the crypto asset markets or to avoid converting their crypto assets into fiat currency, as a means of payment.”

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Business

Nigeria seeks tech partners to revamp the eNaira

Nigeria is in discussions with potential technology partners to create a brand-new system to control and manage the digital currency used by its central bank, the eNaira.

Bloomberg reported that the Central Bank of Nigeria wants to develop its own software for the digital currency so that it can keep full control of the effort, according to two people familiar with the matter who asked not to be named because the matter is confidential. 

According to Bloomberg, the Central bank has discussed the plans, which are in the early stages with New York-based technology firm, R3.

Bitt Inc., which has offices in Draper, Utah, helped the West African nation issue its central bank digital currency, or CBDC, in October 2021, making it the first country to deploy the novel form of money on the continent. A new partner won’t take over Bitt’s job immediately, but would help the central bank meet its long-term aspiration to control the underlying technology, the sources said. 

Bitt Inc., which has offices in Draper, Utah, helped the West African nation issue its central bank digital currency, or CBDC, in October 2021, making it the first country to deploy the novel form of money on the continent. 

Bloomberg also reported that the central bank spokesperson didn’t respond to a phone call or text messages seeking comment. The R3 also declined to comment. 

Bitt in a written statement said that it is aware that its partner, the CBN, works with various service providers to explore technical innovations for their digital infrastructure. The company added that it continues to work closely with the Nigerian central bank and is currently developing additional features and enhancements.

Nigeria is one of the nations at the forefront of efforts to create and promote blockchain-based digital equivalents of their traditional currencies, but like the majority of them, it has had difficulty gaining widespread adoption.

Nonetheless, many central banks around the world are developing comparable initiatives. Their aspirations are motivated by the requirement to stay up with private-sector advancements in digital payments, which have encouraged customers to become cashless and given rise to cryptocurrencies and stablecoins.

Critics of CBDCs have raised concerns that the tokens are a solution in search of a problem, could destabilize commercial banks, and would exclude those consumers and businesses that still rely on cash.

In Nigeria, only about one million people in a nation of more than 200 million had downloaded digital wallets to store the eNaira as of October and transaction volumes have been negligible, according to the central bank. The regulator is aiming to boost adoption through an eNaira redesign and cashless policy announced four months ago.

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Business

Cape Town startup seeks to boost electricity generation using a blockchain-based solution

A South African startup, Momint, recently announced that it has launched a blockchain-powered solution that can ease the African country’s energy woes by installing more rooftop solar systems at public institutions like hospitals and schools. 

The startup’s solution has reportedly already been tested at Delmas High School in the South African province of Mpumalanga, according to a News 24 report.

According to the report, those who are interested in investing in this project can do so by purchasing non-fungible tokens (NFTs), which are connected to solar cells and are offered for sale for a minimum of less than $9.

The solar cells are then leased to institutions that agree to purchase the generated electricity via a so-called standard power purchase agreement.

Commenting on his company’s solution to South Africa’s power generation crisis, Ahren Posthumus, the CEO of Momint, said, “We are a technology company that’s trying to build for the next 15 years, but what we realized is we can’t build a technology company in a country that doesn’t have electricity.”

Posthumus also claimed that his company does not expect to profit from the project which he described as not financially sustainable.

The CEO however, claimed, that his organization chose to pursue this project because it wants to help South Africa overcome its power generation challenges.

On why the startup chose blockchain, Posthumus insisted that this not only makes the project transparent but it also lowers risks for Momint.

“We take legal contracts that represent ownership of each individual cell, and we put those legal contracts into a file that’s typically referred to as ‘the token’ on the blockchain. It’s called a smart contract. That smart contract says, ‘whoever owns this token has the right to the underlying asset’ and they have the right to the revenues that the underlying asset generates,” the CEO said.

Even while the blockchain-based solution is one of the most suitable, it has limitations of its own. One such disadvantage, according to Posthumus, is the possibility of public institutions defaulting.

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Business

FTX Japan resumes crypto, fiat withdrawals

In November 2022, the well-known cryptocurrency exchange FTX fell bankrupt. Since then, the case has taken several different directions. While the rest of the community is yet to recover their lost funds, the Japanese branch of the exchange is going to resume crypto and fiat withdrawals.

In a recent statement, the Japanese affiliate of FTX said that withdrawals would start at midday on 21st February in Tokyo.

As of February 20, 2023, the exchange entailed a total of fourteen assets. 

Elaborating on the status of these cryptocurrencies, FTX stated, “For some time now, we have been instructing you that the assets entrusted to us by our customers are managed separately in accordance with laws and regulations, with crypto assets in our cold wallets and fiat currencies in trust accounts in Japan.“

Firstly, emails have been sent to all clients who are qualified to request a withdrawal of their funds. The exchange claims that Liquid Japan will handle the withdrawal procedure. FTX bought this cryptocurrency trading company last year. As a result, these clients will need to register for an account on Liquid Japan. Following this, they will need to confirm the balance on their FTX Japan account.

Furthermore, the exchange issued a warning. A large number of consumers filing withdrawal requests might overwhelm the withdrawal process. 

The statement read, “In addition, when resuming the withdrawal and delivery service, it may take some time for our company to process due to the concentration of requests from a large number of customers. Thank you for your understanding. We will inform you about the resumption of other services of FTX Japan at a later time.”

Customers who transacted business with FTX.US, remain in limbo as the exchange continues its bankruptcy process. Japan’s regulators were praised for swiftly enacting stringent laws to protect its investors.

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Business

Zambia testing technology to regulate cryptocurrency, Technology Minister says

The Zambian central bank and the country’s Securities and Exchange Commission are in the process of testing technology to regulate cryptocurrencies, the country’s Minister of Technology and Science, Felix Mutati, recently said. 

In his remarks published on the Ministry’s website, Mutati argued that Zambia needs to regulate this revolutionary technology because it encapsulates “the future the country desires to achieve.

Mutati also revealed that the testing of the regulatory technology will soon be upscaled as part of measures to help Zambia attain an inclusive digital economy. In addition, the Minister said Zambia, which is seeking to become the region’s technology hub, is already putting in place the infrastructure needed to help the country achieve such a goal.

While the Bank of Zambia has in the past discouraged the use of cryptocurrencies like bitcoin, the remarks by Mutati suggest that President Hakainde Hichilema’s Government is embracing cryptos.

Meanwhile, the Minister also claimed that Zambia has established itself as an investment destination of choice for many investors.

Mutati said, “Zambia has created magnetism that attracts investments and it is one of the countries in Africa that is becoming a must-be place for investment.” 

According to the Minister, once the envisioned digital payments infrastructure is in place, he foresees a future in which cryptocurrency is the driver for financial inclusion as well as the change-maker for Zambia’s economy.

In addition to using cryptocurrencies to advance the country’s financial inclusion agenda, Zambia hopes to achieve this through the yet-to-be-launched central bank digital currency (CBDC).

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DeFi

The Pros and Cons of DeFi

DeFi has become a common term within the world of blockchain and web3. Bitcoin and the alternative blockchains that succeeded to aim to decentralize currency (via cryptocurrency). 

DeFi is aiming to go beyond decentralizing mere currency by doing the same for borrowing, lending, trading, remittances, and other services customarily found in the traditional finance (TradFi) realm of credit unions, banks, and other legacy institutions.

Let’s take a deep dive into its benefits and disadvantages.

Advantages

  1. DeFi is permissionless and has censorship-resistant transactions

This allows you to engage with DeFi without having to ask for permission to send a remittance, get a loan, or send an online payment. With a bank or a FinTech app, you need permission from them to use or access their services. Depending on the needs you have, you may have to provide personal information, go through rigorous Know-Your-Customer (KYC) procedures, or provide evidence that your finances and credit history can satisfy the requirements to receive a loan.

Additionally, nearly anyone can access DeFi alternatives to these services with only an internet connection, a crypto wallet, and a smartphone (or computer). This allows you to send permissionless payments via a variety of blockchain protocols to anyone in the world. These payments can be big or small (buying a coffee or a house), local or international, and are often much cheaper than remittances and other legacy alternatives.

You can also trade your crypto for other crypto and stablecoins via a decentralized exchange (DEX) in a permissionless fashion. In stark contrast, the permissioned FinTech app Robinhood ended up removing your ability to buy Gamestop shares during the GME short squeeze of 2021. This action led many to explore blockchain and DeFi alternatives.

2. DeFi allows for anonymous or pseudonymous online financial transactions

For proponents, having online financial privacy is a key human right. As an alternative to fiat and legacy payment networks, DeFi allows individuals to be in full control of their finances. Oftentimes, DeFi protocols allow for faster and cheaper payments (and better lending and borrowing rates). While a standard remittance can take days, a crypto payment typically takes from mere seconds to just a few minutes.

3. DeFi helps the unbanked

Another notable benefit of the DeFi ecosystem is how it is opening up access to key financial services for those in underserved regions or developing countries. A shortage of banking infrastructure or the proximity to it in developing countries is one reason why millions around the world still live in largely cash-only economies. Others may lack the financial capital minimums required to open a bank account or are fearful of using them for a variety of other reasons. 

DeFi solutions are enabling the unbanked to access crypto payments, crypto savings accounts, collateralized loans, and other DeFi products. These revolutionary solutions allow the unbanked to skip the intermediary step of banking and go from strictly cash economies to DeFi economies in much the same way that many went from no phone to mobile phone without the need for an intermediary landline and the related infrastructure.

4. The last key benefit of DeFi is there is no middle man meaning you don’t need to trust an individual or financial entity to safeguard your finances

This is made possible via the blockchain. To start, verified crypto transactions are immutable (irreversible and unchangeable) so merchants don’t have to worry about a customer reversing or suspending a payment. More importantly, DeFi protocols allow you to fully control your assets so there is no need to trust an intermediary, third party, or financial custodian. This removes the counterparty risk that has plagued both TradFi (Bernie Madoff Ponzi scheme, Cyprus bank account levy) and centralized crypto exchanges (CEXs) and services (FTX, BlockFi, Gemini Earn).

Disadvantages

  1. Difficult to use

While this has continued to improve, DeFi often lacks dApps that can match the intuitive user interfaces (UIs) and the simple user experience (UX) of FinTech apps and other financial products. This can create a barrier to entry that discourages newcomers from using DeFi products.

2. The immutability and irreversibility of transactions can create problems and financial losses

If you were to send a transaction to the wrong address, it is likely that you could lose the crypto contained within that transaction (unless the receiver chose to voluntarily return the crypto). On the contrary, you can often get your bank, credit union, or financial app to reverse a faulty or fraudulent transaction. This lack of a financial backstop for mistakes is one reason many are reluctant to engage with DeFi.

In conclusion, while most would agree that there are both pros and cons to DeFi, opinions can be divided largely based on one’s leanings. Many that are more traditional or come from the TradFi world would opine about the importance and merits of KYC, AML, trusted financial institutions, and having some sort of recourse in the event of a financially related hack, scam, or other issues. For the crypto native crowd, DeFi is the solution to counterparty risk, financial intermediaries, unbanked populations, the desire to be anonymous, financial censorship, and financial friction and delays in traditional banking.