Home CryptocurrencyBitcoin The IMF calls for tighter regulation of cryptocurrencies in Africa as the industry evolves

The IMF calls for tighter regulation of cryptocurrencies in Africa as the industry evolves

by SuperiorInvest

International Monetary Fund (IMF) Calls for Increased Regulation of African Crypto Markets, One of the Fastest Growing Markets in the World Global Institution Blog reported on November 22

Among the reasons why countries in the region should adopt regulation, the monetary fund cited the collapse of FTX and its ripple effect in cryptocurrency prices, which “raises new calls for greater consumer protection and regulation of the crypto industry.”

In addition, the authors argue that “the risks of crypto-assets are evident” and “it is time for regulation” to strike a balance between minimizing risk and maximizing innovation. Based on the October 2022 Regional Economic Outlook for Sub-Saharan Africa, the article states that “the risks are much greater if cryptocurrencies are adopted as legal tender,” posing a threat to public finances if governments adopt cryptocurrencies as a means of payment.

The publication also noted:

“Policymakers also worry that cryptocurrencies can be used to illegally transfer funds out of the region and circumvent local rules to prevent capital outflows. The widespread use of cryptocurrencies could also undermine the effectiveness of monetary policy and create risks to financial and macroeconomic stability.”

According to IMF data, 25% of countries in sub-Saharan Africa have formally regulated cryptocurrencies, while two-thirds have implemented some restrictions. On the other hand, Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania and the Republic of Congo have already banned crypto-assets, representing 20% ​​of sub-Saharan African countries. Kenya, Nigeria and South Africa have the highest number of users in the region.

Between July 2020 and June 2021, African crypto markets grew in value by more than 1,200%, according to data from analytics firm Chainalysis, with high adoption rates in Kenya, South Africa, Nigeria and Tanzania.

As reported by CointelegraphGhana tests for a central bank digital currency (CBDC). According to Kwame Oppongo, Bank of Ghana CEO, the country’s initiative aims to promote financial inclusion. Ghana has the potential to reach cryptocurrency adoption levels similar to Kenya and Nigeria, countries ranked 11th and 19th respectively in Chainalysis’ Global Cryptocurrency Adoption Index.

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