The collapse of FTX is one of the reasons why countries in the region should implement regulation, according to the monetary fund.
The International Monetary Fund (IMF) is calling for increased regulation of Africa’s crypto markets, which are one of the world’s fastest-growing, according to the global institution’s blog on Nov. 22.
The monetary fund cited the collapse of FTX and its ripple effect on crypto currency prices as one of the reasons why countries in the region should embrace regulation, which is “prompting renewed calls for greater consumer protection and regulation of the crypto industry.”
Furthermore, the authors contend that “risks from crypto assets are obvious” and that “it’s time to regulate” in order to strike a balance between minimising risk and maximising innovation.
According to the article, based on the October 2022 Regional Economic Outlook for Sub-Saharan Africa, “risks are much greater if crypto is adopted as legal tender,” posing a threat to public finances if governments accept crypto as a form of payment.
In addition, the publication stated:
“Policymakers are also worried that cryptocurrencies can be used to transfer funds illegally out of the region and to circumvent local rules to prevent capital outflows. Widespread use of crypto could also undermine the effectiveness of monetary policy, creating risks for financial and macroeconomic stability.”
According to IMF data, 25% of Sub-Saharan African countries have formally regulated cryptocurrency, with the remaining two-thirds imposing some restrictions.
Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of Congo, which account for 20% of Sub-Saharan African countries, have already banned crypto assets. Kenya, Nigeria, and South Africa have the most users in the region.
According to data from analytics firm Chainalysis, Africa’s crypto market increased in value by more than 1,200% between July 2020 and June 2021, with high adoption in Kenya, South Africa, Nigeria, and Tanzania.
Ghana, according to Cointelegraph, is testing a central bank digital currency (CBDC). According to Kwame Oppong, a Bank of Ghana executive, the country’s initiative aims to promote financial inclusion.
Ghana has the potential to reach crypto adoption levels comparable to Kenya and Nigeria, which ranked 11th and 19th in Chainalysis’ Global Crypto Adoption Index, respectively.
To read our latest blog on “$1.5 billion in bitcoin was withdrawn from Coinbase in 48 hours,” click here