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The adoption of cryptocurrency globally has been on a gradual rise and in a little over a decade, the sector has ballooned and is estimated to be worth over USD 3 trillion. This momentum has not escaped Africa which has been reported widely as one of the fastest-growing and most promising continents for the adoption of cryptocurrencies.
According to a report published by Chainalysis, a US blockchain analysis firm, Africa’s cryptocurrency market increased by 1,200% in the past year alone, bringing its total crypto assets to USD 105.6 billion. In the recent past, the continent has also witnessed significant growth in the ownership and trade rates of cryptocurrencies. Currently, apart from Bitcoin (the most widely used cryptocurrency globally), other cryptocurrencies such as Dash and Lisk are being traded in Kenya and other African countries including Botswana, Ghana, Nigeria, South Africa and Zimbabwe.
Additionally, according to recent data from the Absa Africa Financial Markets Index 2021, several African countries are currently looking at adopting digital currencies issued by central banks through secured systems, commonly known as Central Bank Digital Currency and intended to serve as legal tender. Nigeria recently became the first African country to launch a digital currency backed by its central bank after the launch of the eNaira in October 2021, while Ghana continues to partner with German firm Giesecke+Devrient to pilot the e-Cedi. Other countries such as Kenya, Morocco, Rwanda and South Africa are considering the feasibility of using digital currencies for retail purposes while Eswatini and Mauritius are exploring the possibility of using digital currencies for both retail and wholesale purposes.
In a comprehensive article analysing the cryptocurrency boom in Africa, discover lessons that African regulators, including Kenya, can learn from countries such as Japan, the United Kingdom and Switzerland which have adopted well-designed regulations that have continued to encourage cryptocurrency innovations.
Should you have any questions on this legal alert, please do not hesitate to reach out to Sonal Tejpar.