Ecobank Report: African Governments Fear Crypto Market Crash May Also Affect “Broader Economy”

Ecobank Report: African Governments Fear Crypto Market Crash May Also Affect “Broader Economy”

Omar Faridi
  • Most of Africa's crypto economy remains unregulated, Ecobank reported.
  • African authorities have acknowledged the benefits of blockchain technology, but have warned against potential risks associated with cryptocurrencies.

Ecobank Transnational Inc., a pan-African banking conglomerate, recently published a report in which it stated:

 

"African governments worry that if its citizens become overexposed to cryptocurrency investments, the repercussions of a future crash could be felt in the broader economy, hence their scepticism of licensing their use." - Ecobank Transnational Inc.

 

While African authorities acknowledge the potential benefits of cryptographic assets, particularly their underlying blockchain technology, they are "apprehensive about [their] potential risks", the report noted.

South Africa, Swaziland Offer "Favorable Regulatory Stances"

The write-up also mentions that while countries like Namibia have completely banned cryptocurrencies, South Africa and Swaziland have offered the "most favorable regulatory stances" toward cryptos out of all nations on the African continent.

This may be true considering that a new cryptocurrency platform called BitFund was recently introduced in South Africa. According to BitFund's CEO Joshua Miltz, the new crypto service makes it easier for traders to invest in the "lesser known cryptocurrencies."

Miltz explained that most crypto investors in South Africa had only invested in Bitcoin (BTC) or Ether (ETH), but did not feel confident in trying to acquire other cryptocurrencies because of the technical nature of buying altcoins from an exchange. BitFund not only intends to simplify the process of purchasing altcoins, but its creators have also "dealt thoroughly with the legal and regulatory compliance of cryptocurrency investment.”

"No Discernible Regional Regulatory Trend"

While South Africa may appear to have a growing crypto economy, there has been no “discernible regional regulatory trend” regarding digital currencies in Sub-Saharan Africa, the Ecobank report noted. Moreover, Ecobank's write-up stated that many African citizens use cryptos “at their own risk”, after having been warned by regulators about their “potential consequences.”

Additionally, the report mentioned that, “African countries appear to be looking to their neighbors to regulate and innovate first, and learn from their mistakes, rather than being the first mover.”

Furthermore, Ecobank revealed that it had developed an index to monitor the cryptocurrency regulation process in Sub-Saharan Africa.

Crypto Regulations Index

So far, according to Ecobank’s index, the Portuguese-speaking country of Angola has not made any official public statement regarding cryptocurrencies. Benin, a French-speaking Western African nation, has also not issued any official stance on cryptos.

While looking at Ecobank’s report shows that most Sub-Saharan African nations have not officially commented on digital currencies, a number of them have reportedly shown an interest in blockchain technology.

The Democratic Republic of Congo, which is one of the least developed countries in the world, did reportedly launch a pilot program, with assistance from the World Economic Forum, that used a blockchain-based system to track the process of extracting cobalt.

According to Google trends, the West African nation of Ghana is ranked number one in the world when it comes to Bitcoin or crypto-related online searches, while the country has also seen the launch of Finchcoin, which has been called “Africa’s first indigenized cryptocurrency.”