2020 has been a great year for Africa’s cryptocurrency trade. The raising of the adoption of cryptocurrency in Africa is a frequent topic of discussion in today’s financial industry. People even called it a Crypto Renaissance for Africa. Arcane Research reported that African countries like Nigeria, Uganda, Kenya, Ghana, and South Africa are the most frequently Googled countries about bitcoin which makes Africa one of the most reliable continents for crypto adoption.
As International Finance reports, Africa is the second biggest region for P2P trading, and even more, Kenya, South Africa, and Nigeria are among the top 8 of the latest crypto adoption index. This fast-growing tendency caught the eye of financial regulators and brought strict regulations. Last week Nigeria’s Securities and Exchange Commission (SEC) adjusted crypto investments and proposed new rules for cryptocurrency investments in Africa. Regulations touch any person or corporation who takes part in Blockchain-related services like reception, transmission, and execution of orders. Because of this and SEC’s several other regulations put cryptocurrency investors at risk. Now if they lose money, SEC won’t take any action to recover their investment.
Some experts consider these new changes beneficial and support the regulations intended to protect consumer’s rights. They believe that financial authorities should protect their consumers from risks. But on the other hand, Gareth Egan, Nigeria-based exchange Bitpesa, doesn’t support regulating the entire industry. He believes that newly received strict regulations will badly affect financial performance as it’s going to suppress innovative actions in the African financial industry.
“Protecting the consumers’ rights is an important goal but for this, we can take different steps. No further regulations are necessary for avoiding harming customers. The harsher the regulations are, the less chance there is to implement new ideas. This may be the beginning of suppressing originality in today’s financial industry”, says Egan.
The popularity of Cryptos is growing in African countries
There are several reasons for the crypto-revolution in Africa. Despite the diversity of African countries, they have so many similarities and shared trends. All of them have high inflation rates, similar economic problems, and a lack of banking infrastructure. Many African countries like Kenya, Nigeria, Ghana, South Africa, and others usually use not only bitcoin but also other cryptocurrencies, such as Dash and Lisk. In general, mobile money has become a huge success in Africa, and investors from all over the world express increased interest in the African cryptocurrencies market.
The popularity of cryptocurrencies in Africa is significantly related to the success of bitcoin. Bitcoin was first introduced in 2009 and is a digital currency which is one of the most popular cryptocurrencies. There are thousands of different alternative virtual currencies in the world, but bitcoin is the most interesting and attractive for the traders as it’s not governed by the centralized banks and is owned by private individuals.
One of the reasons for African crypto-renaissance is the willingness of African people to adopt new technologies and keep pace with digital financial changes. The fintech in Africa grows fastly and is popular among the people as it aims to give customers more access to financial services. Facebook’s application Libra plays an important part in the growth of African fintech. It’s a new payment system that allows Facebook users to send, receive, and withdraw money by just one click on their smartphones. Since many users are still using Facebook in Africa, probably they have a touch on Libra as well, making cryptocurrencies succeed even more in Africa.
Fintech in Africa plays a major role in economical success and an increase in GDP. As a result, the rate of poverty has diminished. As the tendency of using mobile phones is rising and more and more people are getting used to digital technologies, more people have access to newly established financial services. It means that, although Africa is considered as one of the poorest places in the world, the use of financial technologies changed the situation for good. According to the UN, an increase in economic growth is expected in 2020, which means that fintech played an important role in promoting digital financial technologies and taking part in the economic recovery of African countries.