Everything (un)clear: Regulation of crypto currencies in Africa

Pan-African Ecobank has produced a report on the regulation of crypto currencies in sub-Saharan Africa. The balance: Only in two of the sub-Saharan nations studied are the authorities positive about digital money.

Regulatory ambiguity is one of the main reasons why the mass adaptation of Bitcoin and its allies has yet to take place. This lack of clarity is also reflected in a study by Ecobank that examines the regulatory status quo in Africa, particularly sub-Saharan Africa. Almost half of the nations have no official position on crypto currencies. Only Namibia, South Africa and Swaziland, on the other hand, have officially banned them, while Bitcoin and Co. are officially well-disposed towards them. The official positions of the other nations fluctuate between suspicious observation and cautious approach.

Namibia: complete ban of the Bitcoin evolution, because not centrally covered

The report contains a map on which the nations surveyed are arranged in colour according to the current state of regulation. A red spot immediately catches the eye: Namibia. The country in the southwest of Africa is the only one of the examined in which Bitcoin evolution crypto currencies are officially forbidden. The reason can be found in a position paper of the Namibian National Bank from September last year. It says:

“Apart from the fact that the bank does not recognise virtual currencies in Namibia as legal tender, it also does not recognise that it is a foreign currency that can be exchanged for national currency. This is because virtual currencies are neither issued nor guaranteed by a central bank nor hedged by a commodity.

However, the same paper also recognises the potential of crypto currencies to speed up remittances. Nevertheless, Bitcoin remains a moneta non grata in Namibia for the time being.

Green light in South Africa and Swaziland

The situation in South Africa is different. Although crypto currencies do not yet enjoy full legality there, the government is very anxious to create a regulatory framework for the handling of crypto currencies. The cooperation between the government and the blockchain company Bankymoon, which has been in place since July 2017, serves this purpose. The South African central bank also sent positive signals last year regarding the recognition of crypto currencies as legal means of payment. Meanwhile, the South African Revenue Services (SARS) is actively looking for ways to tax transactions and investments with crypto currencies appropriately. In April of this year, it decided that income from cryptographic transactions must in principle be taxed as capital income.

Swaziland, a landlocked South African state, has also been open to crypto currencies. The central bank of the monarchy, which is one of the poorest countries in the world, spoke positively about virtual currencies at a conference last October:

“It would probably be unwise to reject crypto currencies and we at CBS [Central Bank of Swaziland] are learning and want to support innovation. If this is innovation, we don’t want to nip it in the bud. We want to know more about them.”

Uncertainty prevails
The regulatory authorities in nine of the 39 nations examined take a fundamentally critical view of crypto currencies. These countries include Nigeria, Ethiopia, the Democratic Republic of Congo and Kenya. However, there are supposed to be signs that these countries are closely monitoring developments in the crypto-currency sector. In six countries there are indications of research efforts in the crypto area, but these are often accompanied by warnings from the regulatory authorities. In addition to Senegal, Zimbabwe, Cameroon and Ghana are among those nations that are curious about cryptography.

With 21 investigated nations, the overwhelming majority have no official line against Bitcoin and Co. The situation in Africa does not really differ from the rest of the globe in this respect.