As crypto grows across Africa, IMF asks for greater regulation
According to a blog post published by a worldwide organization on November 22nd, the International Monetary Fund (IMF) is advocating for more regulation of crypto exchanges in Africa, which is one of the markets with the highest growth rate in the world.
The collapse of FTX and the subsequent effect it had on the prices of cryptocurrencies is "prompting renewed calls for greater consumer protection and regulation of the crypto industry. " according to the International Monetary Fund (IMF), one of the reasons why countries in the region should embrace regulation. The IMF cited this as one of the reasons why countries in the region should embrace regulation.
In addition, the authors claim that "risks from crypto assets are evident" and that "it's time to regulate" in order to establish a balance between avoiding risk and making the most of innovation.
The article, which is based on the Regional Economic Outlook for sub-Saharan Africa for October 2022, warns that "risks are much greater if crypto is adopted as legal tender" which poses a danger to public finances if governments accept crypto as a form of payment.
According to the statistics provided by the IMF, just one quarter of the nations located in sub-Saharan Africa have explicitly controlled cryptocurrencies, while the remaining two thirds have adopted certain limitations.
On the other side, Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of the Congo have already prohibited the use of crypto assets. This accounts for twenty percent of the nations that are located in the sub-Saharan region.
The biggest concentrations of users may be found in the countries of Kenya, Nigeria, and South Africa.
According to statistics provided by the analytics company Chainalysis, the value of Africa's cryptocurrency market surged by more than 1,200% between July 2020 and June 2021. The growth was driven mostly by increasing adoption in Kenya, South Africa, Nigeria, and Tanzania.
According to a report by Cointelegraph, Ghana is conducting tests for a digital currency that would be issued by the central bank (CBDC).
In Chainalysis' Global Crypto Acceptance Index, Kenya and Nigeria were placed 11th and 19th respectively. Ghana has the potential to attain levels of cryptocurrency adoption comparable to those of Kenya and Nigeria.