Bitcoin usage grows in Africa, as African countries consider Bitcoin regulation

As bitcoin usage grows in Africa, a growing number of government officials, legal experts and e-commerce entrepreneurs are calling for regulation of the virtual currency.

In Nigeria, Africa’s largest economy, leather goods export site Minku now accepts Bitcoin. Not long ago, South African Bitcoin exchange BitX also expanded its business to Nigeria, and recently partnered with mobile payment and smart card company Zazoo to promote the use of Bitcoin through digital prepaid Mastercard VCpay.

维克托•慕尼思, partner at international law and arbitration firm TRPLAW, said:

“Bitcoin is becoming increasingly popular in Nigeria, with many Nigerians using it in their daily transactions. Private businesses are selling bitcoin to interested parties, and retailers are starting to accept bitcoin as payment.”

At the same time, the Central Bank of Nigeria also intends to regulate Bitcoin.约瑟夫•娜娜, deputy governor of the Financial System Stability Department of the Central Bank of Nigeria, also said at a recent financial summit that regulating virtual currencies can protect consumers and investors, maintain financial system stability, and prevent criminals from using Bitcoin for money laundering and terrorist financing.

慕尼思also believes that regulation of Bitcoin trading is necessary. He said:

“The central bank’s intention to set a proper regulatory framework that will not only regulate the use of Bitcoin but also put Bitcoin businesses in Nigeria on a legal path is very constructive.”

Although more and more Nigerians are using Bitcoin to shop online, many are afraid to use it because of the volatility of Bitcoin prices.蒂姆•阿基波, CEO of Nigeria-based TimbaObjects, said:

“Volatility makes it impossible for most people to easily invest their hard-earned money in Bitcoin, and those who accept Bitcoin tend to convert their Bitcoin into legal currency as soon as possible to reduce the risk of sharp price fluctuations.”

TimbaObjects is a company that makes mobile and web apps.

This situation is not unique to Nigeria, Munnis said:

“Another country that uses Bitcoin heavily is South Africa. There are many exchanges in South Africa, but many financial institutions, including the South African Reserve Bank, are reluctant to accept Bitcoin. However, this may change as Bitcoin usage increases.”

A Bitcoin summit will be held in South Africa in March next year, which is the first of its kind in South Africa. South Africa also has an institution dedicated to Bitcoin research - the Bitcoin Research Institute, which provides people with courses on Bitcoin basics and blockchain application development.

维尔纳•罗延, Head of Business Development at BitX, said:

“Regulation will protect consumers, weed out bad actors, and give businesses (investors) more transparency and confidence in their business scope, which in turn will attract more funding and innovation. At the same time, all businesses that have Bitcoin as their core business (at least those that will be around Bitcoin in the next few years) will also regulate themselves by backing up KYC (know your customer) and AML (anti-money laundering) to other financial institutions.”

Werner Royen pointed out that BitX has begun to establish a compliance framework and is working closely with the government, regulators and financial institutions in the hope of setting an example for the Bitcoin industry in South Africa.

Verna Royan says:

“We are very open to effective approaches that reduce key risks without undermining innovation, giving businesses and startups more opportunities to grow, learn and explore new areas without being burdened with excessive and cumbersome regulation.”

Werner Royan also agrees with the "sandbox" management approach adopted by some financial sector regulators, which allows digital currency companies to operate within certain limits, such as a certain number of users and transaction volume. He also suggested learning from New York's BitLicense regulatory framework and California's Bitcoin Regulatory Act. Although California's Bitcoin Act has been shelved, it is only temporary. On Tuesday, New York issued its first BitLicense.

With Unicef ​​accepting donations in virtual currencies and Barclays becoming the first UK bank to help charities accept Bitcoin payments, the need for regulating virtual currencies in Africa is growing.

Banks around the world are exploring Bitcoin, trying to find potential uses for it and its blockchain technology, which the bank says has the "potential to transform financial services."

In addition, a Commonwealth working group consisting of Australia, Barbados, Kenya, Nigeria, Singapore and Tonga also agreed that virtual currencies will benefit member countries and drive development after meeting with IMF and World Bank officials in London last month. However, virtual currencies also have some risks. The working group urged Commonwealth members to "consider applying the existing legal framework to virtual currencies, and they may consider amending or adding new laws to regulate virtual currencies as appropriate."

The Commonwealth Secretariat and 18 African member states will work together to establish best practices for the use of digital repositories and set regulatory examples to assist member states in developing guidelines.