· 6 months ago

How different African governments have reacted to cryptocurrency

Cryptocurrency

Zimbabwe, through its central bank, the Reserve Bank of Zimbabwe, recently banned cryptocurrency trading. The bank issued a warning to all the financial institutions in Zimbabwe. Giving them only 60 days ” to end their existing relationships with crypto-currency exchanges.”

The letter from the Governor pointed out that “Cryptocurrencies can be used to facilitate tax evasion as well as the externalization of funds in violation of a country’s laws.”

Adding that “any person who buys, sells, or otherwise transacts in cryptocurrencies, whether online or otherwise, does so at their own risk and will have no recourse to the Reserve Bank or to any regulatory authority in the country.”

Zimbabwe is home to Golix, one of the most prominent crypto-companies in Africa.

When you follow the cryptocurrency conversation across the continent, you realize that actions by Zimbabwe’s reserve bank are not in isolation. There’s a pattern.

The South African government, one of the first across Africa to realize the potential of cryptocurrencies, in 2014, published a white paper on virtual currencies.

Also, read: Uganda to host one of the biggest blockchain conferences in Africa

Through its central bank, South African Reserve Bank, it attempted to explain its stance on virtual currencies. Which many understand as cryptocurrencies.

Titled “Position Paper on Virtual Currencies”, the paper gave background and “[clarified] concepts pertinent to the virtual currency discussion and drew a distinction between various categories of virtual currencies.

Additionally, the paper also “highlight[ed] several immediate risks associated with the current virtual currency landscape, in particular, the decentralized convertible virtual currencies, and concludes with the Bank’s position and responsibility in this regard as well as a caution to users of virtual currencies.”

The bank concluded by admitting that it “does not oversee, supervise or regulate the VC [Virtual Currency] landscape”. And cautioning the users that “all activities [regarding cryptocurrencies] are performed at the end user’s sole and independent risk and have no recourse to the Bank.”

But, it also made it clear that “VCs pose no significant risk to financial stability, price stability or the National Payment System.” Though, fast forward, the government made attempts to start taxing Bitcoin holders.

In January 2017, the Central Bank of Nigeria issued a circular cautioning the banks and financial institutions on the Virtual Currencies. Saying that “transaction in VCs are largely untraceable and anonymous. This, the central bank believed will lead to “abuse by criminals” especially in “money laundering and financing of terrorism.”

The Guardian, one of Nigeria’s leading papers, highlighted Nigeria’s interest in introducing a virtual currency. That was in October 2017. But, in February 2018, the Central Bank of Nigeria issued a follow-up circular. Further distancing itself from cryptocurrencies. The Acting Director of Communications, Isaac Okarofor, who issued the circular wrote that;

“Further to the circular issued by the Central Bank of Nigeria (CBN) on January 12, 2017, to Banks and other financial institutions on virtual currency operations in Nigeria, the Bank wishes to reiterate that cryptocurrencies such as Bitcoin, Ripples, Monero, Litecoin, Dogecoin, Onecoin, etc and Exchanges such as NairaEx are not licensed or regulated by the CBN.”

The circular was just an official cementing of the position of the government after the Governor of the Central Bank of Nigeria had earlier been quoted describing Bitcoin as a gamble. “Cryptocurrency or bitcoin is like a gamble, and there is a need for everybody to be very careful,” Independent quoted him.

Despite the fact that Bitcoin was among one of the most searched topics in Nigeria in 2017, there seems no clear indication that the Nigerian government is looking at understanding the crypto field further. And, focus on regulating.

Though, as it is currently, according to Balogun Harold, trading in cryptocurrencies in the West African nation isn’t illegal. “For investors and businessmen looking to set up cryptocurrency services/ businesses in Nigeria, crypto-businesses are generally permissible under Nigerian law,” it wrote.

In Kenya, while as the governor Central Bank of Kenya described Bitcoin as a pyramid scheme in November 2017.

According to The Standard, a Kenyan Newspaper, the governor issued the same warnings in 2015 about cryptocurrencies. Despite the fact that Kenya has set up a Blockchain Committee, which ideally covers Cryptocurrencies, the Central Bank of Kenya issued a letter warning all Banks in Kenya about cryptocurrencies. That was in April 2018.

Tanzania, a country that’s looking to charge bloggers and digital publishers over US $900, hasn’t been very vocal about cryptocurrencies. Though, in October 2017, the Governor Bank of Tanzania warned Tanzanians about “the risks associated with digital currencies.”

Though, he cast a positive remark by saying that “we know about cryptocurrencies, but as a government, we want to study it so we can understand it better.” Adding that “we are now working to see if we should allow it, regulate it or ban it. We are still studying the matter and looking at it very closely before taking any further measures.”

Uganda, the country that wants to tax social media users as well as charge Mobile Money users to the bone, has mixed reactions from the government. In February 2017, the Bank of Uganda issued a warning to the public against OneCoin.

The central bank warned that “whoever wishes to invest their hard earned savings in Cryptocurrency forms” was “taking a risk in the financial space where there is neither investor protection nor regulatory purview.”

Also, read: Chinese Crypto-billionaire founder of Binance visits Uganda

However, Uganda’s president, Yoweri Museveni, held talks with Binance Founder, Zhao Chengpeng. On his visit to Uganda, the president assured him of his commitment to working with Binance to ensure that Uganda becomes “a global Blockchain destination.” Museveni is also expected to speak at the African Blockchain Conference taking place in Uganda next week.

In Ghana, the Central Bank came out at the beginning of 2018 and said that “Bitcoin is not yet legal”.

While the Egyptian government was suspected to be using local internet users to secretly mine cryptocurrency in March 2018. Despite a well-respected religious leader, Grand Mufti Shawki Allam, criticizing cryptocurrencies in January 2018.

The Mufti issued “an official fatwa (Islamic ruling) on January 1, 2018. It forbade “the trade of bitcoins deeming them haram (against religious teachings).” According to Egypt Today.

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