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IMF Says Africa’s Crypto Market Needs Better Regulation

The International Monetary Fund (IMF) recently emphasized the growing need for greater regulatory initiatives for cryptocurrencies in Africa as the continent experiences a tremendous increase in adoption among institutional and retail investors.

The IMF cited the recent FTX collapse to highlight the risks of exposing investors to a largely unregulated cryptocurrency market. The global institution also noted that since there appears to be a global dearth of proper regulation, the African cryptocurrency scene appears to be lacking the most.

According to the IMF, regulating a highly volatile and decentralized system remains a challenge for most Governments, requiring a balance between minimizing risk and maximizing innovation. 

“Only one-quarter of countries in sub-Saharan Africa formally regulate crypto. However, as our Chart of the Week shows, two-thirds have implemented some restrictions, and six countries, that is to say, Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of Congo have banned crypto. Zimbabwe has ordered all banks to stop processing transactions and Liberia directed a local crypto startup to cease operations (implicit bans),” The IMF added.

Also, the Central Bank of Liberia ordered a local crypto startup to desist from promoting its digital asset products in May last year, noting that it is illegal in the country.

Many African countries have implemented bans and regulations on crypto, however, these have only forced local investors to resort to black market trades as they seek to circumvent them, exposing investors to more damage. 

Additionally, most African countries that have placed a form of restriction on cryptocurrency have cited risks to financial stability and the possibility of its usage for illegal finance, such as money laundering and terror financing.

Amidst these bans and uncertainties, the Central African Republic stands out with its reception of cryptocurrencies. In April, the country became the first African nation to adopt BTC as legal tender, and the second in the world, after El Salvador.

Due to the adoption of rules that govern the sector and create a crypto hub in Africa, the Central African Republic continues to be the continent’s most crypto-friendly nation. The nation introduced the “Sango Coin” in this regard in July.

As these bans have done little to dampen investor interest, they have exposed cryptocurrency users to greater risks. In light of the FTX implosion and the sharp volatility that ensued, proper regulation has become a necessity now more than ever.

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Polygon Partners With CV Labs To Boost Blockchain Adoption In Africa

The Polygon team just revealed a partnership with CV Labs, the ecosystem developer based in Switzerland and part of blockchain venture capital firm CV VC. The partnership with the CV Labs network is to introduce businesses and organizations to the Polygon ecosystem. 

“Polygon is partnering with CV Labs to drive the adoption of blockchain technology throughout Africa. Together we believe that the technology has the potential to improve the lives of individuals, businesses, and organizations due to its transparency, immutability, speed, and low transaction fees,” CV Labs stated.

CV Labs added, “Polygon is engaging and collaborating with the CV Labs network in order to introduce businesses and organizations to the Polygon ecosystem. This partnership will help expand Polygon’s reach and contribute to a more digitally robust and inclusive future for Africa.”

According to CV Labs, Polygon will help African startups gain access to resources and funding, enabling them to scale their businesses and create jobs. Polygon will further work with CV Labs to enable corporate and government bodies to experiment with blockchain technology to gain experience. 

Furthermore, Polygon and CV Labs believe Africa has the talent and infrastructure to become a global blockchain hub and is looking forward to supporting enterprises, startups, NGOs, and any actors interested in the disruption blockchain can bring. 

CV Labs emphasized, “Together, we are working to support the development of the ecosystem and seek to build partnerships with Africans for Africans.” 

The partners have also agreed that since Polygon already provides education and training to young people on blockchain technology through workshops, hackathons, and partnerships with blockchain associations, they have created a skilled workforce that can drive the adoption of blockchain on the continent in a sovereign way.

Blockchain technology shows great promise for Africa. Distributed ledger systems, for example,  have the potential to provide Africans with a secure and transparent way to transact. In addition, blockchain-based applications can help reduce corruption and fraudulent activity. 

Polygon sees the African continent as a land of opportunity, demonstrated by its investments in blockchain startups and working closely with them to build an ecosystem that will support the growth of the blockchain industry in Africa. In addition, the decentralized Ethereum scaling platform is working with government officials, regulators, and other stakeholders to create an enabling environment for blockchain technology to thrive. 

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Binance turns down request to invest in Genesis

Towards the end of last week, Genesis Global Capital, the lending business of Genesis Trading suspended redemptions. The move was made in response to the severe market disruption and loss of industry confidence brought on by the collapse of FTX, according to its parent firm, Digital Currency Group.

The business then applied for a $1 billion emergency loan. The cryptocurrency lender issued a warning yesterday, stating that the company would fail without funding backing.

According to a recent report from The Wall Street Journal, Genesis asked Binance for an investment. Per the media outlet’s unknown sources, Genesis also reached out to private equity giant Apollo Global Management for support.

The former, however, ended up turning down the request. 

Elaborating on why, the report noted, “Binance decided not to invest, fearful that some of Genesis’s business could create a conflict of interest down the line, according to one of the people familiar with the matter.” 

It’s important to remember that Changpeng Zhao, CEO of Binance, recently disclosed that the exchange was creating a recovery fund to assist projects amid a liquidity crisis. Genesis contacting Binance to save its sinking ship is therefore not entirely unexpected.

Genesis’ request was denied by the biggest cryptocurrency exchange, although the lender has no immediate plans to declare bankruptcy. In response to the current situation, the  spokesperson commented,

“We have no plans to file bankruptcy imminently. Our goal is to resolve the current situation consensually without the need for any bankruptcy filing. Genesis continues to have constructive conversations with creditors.”

Nonetheless, it should also be noted that the lender lent $2.4 billion to Three Arrows Capital. Notably, Genesis’ parent company, Digital Currency Group has a $1.2 billion claim against the hedge fund.

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Kenya Proposes Bill to Tax Crypto Transactions

The Kenya Revenue Authority (KRA) is set to go after the more than four million Kenyans who own cryptocurrencies if MPs approve changes to the law aimed at regulating and taxing the fast-growing digital currency trade.

The Kenyan tax authority has proposed a Capital Markets (Amendment) Bill, 2022 that seeks to introduce taxation of the crypto exchanges and digital wallets and imposes transaction taxes akin to excise duty charged on bank transactions.

According to Business Daily Africa, banks will be deducting 20 percent excise duty on all commissions and fees charged on transactions. Additionally, Kenyans will pay the KRA capital gains for the increased market value of the crypto when they sell or use the digital currencies in a transaction if the Bill is approved.

Mosop MP Abraham Kirwa, stated, “Where the digital currency is held for a period not exceeding twelve months, the laws relating to income tax shall apply or for a period exceeding twelve months, the laws relating to capital gains tax shall apply.” 

This would be the first time Kenya subjects cryptocurrency transactions to any type of regulation whatsoever. The industry is not regulated in the nation and is still mostly unregulated in developed nations.

This makes it difficult to establish the value of digital assets held by the mostly tech-savvy Kenyans, but the amount could run into billions of shillings. The Bill mandates that individuals who hold or deal in digital currency submit particular information to the Capital Markets Authority (CMA) for tax purposes.

Furthermore, those owning or dealing in digital currency will be required to furnish the regulator with information regarding the amount of virtual currency in Kenya shillings. They will also be required to inform the CMA of the type of virtual currency transacted, the date on which the virtual currency was acquired, and the date on which the virtual currency was sold.

The Bill states, “A person who possesses or deals in digital currency shall provide the Authority with the following information for tax purposes—the amount of proceeds from the transaction, any costs related to the transaction, and the amount of any gain or loss on the transaction.” 

The Bill was introduced over six months after a UN assessment revealed that Kenya had the highest percentage of its population using cryptocurrencies in Africa, highlighting the nation’s vulnerability to the growing collapse in the crypto industry.

According to a survey by the United Nations Conference on Trade and Development (UNCTAD) published in June, 4.25 million people, or 8.5% of the population, in the country are cryptocurrency owners.

This places Kenya ahead of developed economies such as the United States, which is ranked sixth with 8.3 percent of its population owning digital currencies.

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Business

JP Morgan Officially Registers Cryptocurrency Trademark

US banking giant JP Morgan continues to forge ahead in the cryptocurrency space, with the lender showing through a trademark filing its intention to explore various products.

In a document retrieved from a granted USPTO application, JP Morgan has officially registered a cryptocurrency trademark. Aptly titled, “JP Morgan Wallet”, the brand is set to support virtual currency transfer, exchanges, and cryptocurrency payment processing.

JP Morgan is set to offer its customers Bitcoin exchange services via the newly developed trademark. Furthermore, the filling was granted as of Nov 15.

Mike Koundoudis reported the original document. JP Morgan Wallet had filed for “Virtual Currency Transfer + Exchange, Crypto Payment Processing, Virtual Checking Accounts, and Financial Services,” according to his tweet.

Under the official document, a clearer picture of the official offerings came into view. The registration grants JP Morgan Wallet the ability to provide services regarding cryptocurrency transfers on a blockchain, exchange cryptocurrency, payment processing through credit or cash cards, and the creation and management of checking accounts that operate virtually.

The Crypto Basic reports that JP Morgan registered the trademark in July 2020. Furthermore, it will be intriguing to see how the JP Morgan Wallet evolves under what may be the most unpredictable market in history. As a result, the volatility has increased since FTX, one of the largest exchange platforms for cryptocurrencies, was completely destroyed.

In August of 2021, JP Morgan began allowing its customers to invest in cryptocurrency funds. This was a service that was offered through New York Digital Investment Group, a cryptocurrency investment firm. Subsequently, the move preceded its continued expansion into the virtual currency market.

The JP Morgan Wallet’s launch and ongoing development are, at best, encouraging signs of the market’s continued growth. In the end, one of the American banks with the greatest total assets is now accepting the money.

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South African Exchange, VALR, Goes Live in Zambia

South African crypto exchange, VALR, has been launched in Zambia with crypto trading pairs using the Zambian Kwacha (ZMW).

The crypto exchange stated on its blog, “We’re excited to announce that VALR, Africa’s largest crypto exchange, has arrived in Zambia!”

“Thus far, our ZAR pairs have seen a cumulative trading volume of over R167bn ($10bn) and now we’re expanding to the Zambian market with BTC/ZMW & USDC/ZMW trading going live on Monday, 21 November, at 11:00 am,” the crypto exchange further stated.

Speaking more about crypto trading pairs, VALR also noted that Zambian customers will now be able to simply buy or sell Bitcoin (BTC) and USD Coin (USDC) directly with Kwacha.  

Additionally, all customers have access to the 60+ cryptocurrencies already available on VALR. 

Speaking about the Zambian launch, VALR CEO, Farzam Ehsani, said,

“As the largest crypto exchange headquartered in Africa, VALR is excited to now be serving the people of Zambia,” says VALR CEO Farzam Ehsani. “We’ve built a world-class product with a focus on robust security, high performance, and regulatory compliance, and we look forward to welcoming the Zambian retail and institutional market to VALR.”

VALR concluded the blog by saying that the BTC/ZMW & USDC/ZMW trading launch will roll out over three stages for the advanced traders.

The trading launch started with Post-only which happened on  21 November at 11:00 am. In this stage, starting at 11:00 am, customers will be able to post buy-orders and sell-orders on the Exchange Buy/Sell screen. No matching (or completion) of trades will be allowed, which will give time for the order book to fill up with sufficient liquidity from traders. This stage will last a minimum of 10 minutes.

The Limit-only (at least 10 minutes after the Post-only stage) follows. In this stage, customers can only place limit orders on the Exchange Buy/Sell screen. Market orders and the simple Buy/Sell feature will not yet be enabled. During this stage, orders will be allowed to match. This stage will last at least 1 hour.

Full trading comes after (at least 1 hour after the Limit-only stage). In this stage, all trades, including market orders and Simple Buy/Sell orders will be allowed.

VALR has processed over $10 billion of trading on the platform since launch. The crypto exchange recently raised $50 million in one of Africa’s largest ever crypto funding round. The proceeds of the raise will be used primarily to expand across Africa and into other emerging markets such as India, and to bring more products and services to its growing base of global customers.

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Business

Fintech Unicorn Chipper Cash set to acquire Zambian fintech Zoona

Pan-African cross-border payment app Chipper Cash is set to acquire Zambian fintech company Zoona Transactions International. 

The acquisition, pending deal completion and all required clearances is part of Chipper’s effort to grow across the continent and is viewed as a chance to enhance payment and remittance services. Additionally, the two businesses complement shared offerings, such as transfer solutions, disbursements, and API.

Laura Kennedy, Chipper Cash’s VP of Corporate Development stated that Zoona’s acquisition will offer incredible innovation, a great partner network, complementary products and services, and talented in-country teams.

She added, “Bringing these companies together under the Chipper umbrella will mean we can open up even more borders, bringing quality financial services to life in more countries and connecting more people across the continent.” 

For Zoona’s co-founder and CEO, Brett Magrath, this acquisition allows the two companies to combine their expertise to connect consumers and businesses across the continent while positioning themselves as the first choice provider of financial services for the people of Africa. 

CEO Ham Serunjogi founded Chipper Cash with Maijid Moujaled, who currently serves as the payment company’s President, in 2018 to offer fee-free personal and cross-border payment to Africa. Since then it has raised $300 million in venture capital funding and is now valued at $2.2 billion. Its services are available in Ghana, Uganda, Nigeria, Tanzania, Rwanda, South Africa, and Kenya, as well as in the UK and US. 

When Zoona was established in Zambia’s tech ecosystem in 2008, it paved the way by creating the Tilt service, which allows people and businesses to pay and send money to banks and money mobile providers in the nation using cash, its digital channel, or its network of more than 450 interoperable agents.

Chipper cash, whose emergence coincides with the start of Africa’s mobile money industry, has processed over $3 billion worth of transactions since its launch. In 2020, the Zambian company sold its business in Malawi to Cape Town-based payments company Mukuru, as it refocused its business to a B2B model.

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Bahamas Securities Regulator Takes Full Control of FTX’s Digital Assets

The Securities Commission of Bahamas recently announced that it ordered all contents of FTX’s crypto wallets to be transferred to a wallet controlled by it.

The Securities Commission stated in a media release,

“On 12 November 2022, the Securities Commission of The Bahamas took the action of directing the transfer of all digital assets of FTX Digital Markets Ltd. (“FDM”) to a digital wallet controlled by the Commission, for safekeeping.”

According to the commission, urgent interim regulatory action was essential to protect the interests of clients and creditors of FDM.

SCB’s statement added,

“It is not the understanding of the Commission that FDM is a party to the US Chapter 11 Bankruptcy proceedings.”

In its statement, the Securities Commission of The Bahamas also stated that it will engage with other regulators and authorities in multiple jurisdictions going forward to address matters affecting the creditors, clients and stakeholders of FDM globally to obtain the best possible outcome.

Towards the end of last week, Sam Bankman-Fried’s crypto exchange FTX filed for Chapter 11 bankruptcy protection in the US. However now, it seems like there might be a jurisdiction dispute between the US and the Bahamas.

It should be noted that the Royal Bahamas Police launched its investigation into FTX’s fall a week ago. The investigation was focused on looking into the possibility of any criminal misconduct connected with the FTX exchange’s collapse.

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Business

Ripple Partners with MFS Africa

Ripple, a software company located in the United States, has announced that their crypto solution known as “on-demand liquidity” would assist MFS Africa in “streamlining real-time mobile payments for consumers in 35 countries.” The expansion of Ripple’s cooperation with MFS Africa, which has 800 payment lanes throughout the continent, would purportedly see the entire area realize what Ripple has termed as “financially inclusive advantages.”

On November 14, the American technology startup Ripple announced that it has partnered with MFS Africa. According to Ripple, this agreement is meant to “streamline [MFS Africa’s] real-time mobile payments for its consumers across 35 nations.” In accordance with the agreement, MFS Africa, a prominent fintech company on the continent, would utilize the on-demand liquidity cryptocurrency service from Ripple (ODL).

MFS Africa’s CEO, Dare Okoudjou, commented on the company’s choice to collaborate with Ripple in the following manner; “MFS Africa’s aim is to make borders matter less when it comes to payment within, to, and from Africa.” He further added that they were excited to further this aim through their collaboration with Ripple to make mass-scale, quick, secure, and affordable remittances possible.

According to the MFS CEO, cooperation with Ripple is the company’s first attempt to use blockchain technology to “amplify our [MFS Africa’s] influence on consumers and enterprises on the continent growth in a new economy.”

The Ripple team claimed in a blog post dated November 14 that ODL is “beneficial to markets that traditionally struggle with liquidity sourcing,” describing the partnership as a “victory for financial inclusion in Africa.”

According to the team, the “entire area stands to profit from financial inclusion,” due to the increasing collaboration between Ripple and MSF Africa, which has 800 payment corridors across the continent.

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Lugh Partners With Ejara To Bring Cheaper Cross-border Payments Between Europe and Africa.

EURL is a 1:1 euro-backed stablecoin launched in 2021 by the French AMF. The EURL is issued and managed by Lugh, a company backed by Groupe Casino and Société Générale, and it is fully backed by a euro reserve held by SG.

Ejara is a mobile app that supports cryptocurrencies and tokenized assets that are specifically tailored to the African market. Ejara is also the first crypto investment app available in French Africa on Android and the App Store.

According to some estimates, there are about 30 million Africans residing outside of their home countries, with remittances to Sub-Saharan Africa alone reaching roughly $47 billion. Despite the huge demand, payment channels between Africa and the rest of the globe are the most costly in the world.

On average, remittances cost between 8 and 10% of the transaction value, which is a significant sum in any situation. As a result, about $4.7 billion in expenditures depart the continent every year. 

A low-cost, dependable cross-border payment system might be extremely beneficial in improving the financial situation of the African population.