Jump into the latest Africa Crypto Week in Review, deep-dive into Binance Nigeria news, Worldcoin Kenya moves, and New Tanzania Crypto Tax.
The impact of high interest rates in the United States on emerging economies, especially in Africa, accelerates crypto adoption.
And in the headlines, despite Nigeria’s tussle with Binance, Kenya and Tanzania are warming up to crypto and looking to legislate with progressive policies.
Here’s How The US Federal Reserve Has Been Key Factor in Africa Crypto Adoption
The United States is an economic superpower. Its monetary policy direction influences economies globally. To understand why, you must look at what’s happening in Japan, China, and Africa.
If anything, the ripple effects of the Federal Reserve’s rate policies have profound consequences, especially in emerging economies, and they have inadvertently fanned crypto adoption across Africa.
First, there were USD shortages amid capital outflows and rapid currency depreciation.
This combination inevitably drove a surge in crypto adoption across the continent. USDT, Bitcoin, and other top altcoins timely offered a refuge from economic instability.
Encouragingly, African individuals and businesses have increasingly turned to BTC and USDT as a hedge against these international monetary shocks.
There is little hope for currencies like the Naira to recover, provided the Federal Reserve keeps rates elevated. And everyone saw this coming.
Over the past decade, as cryptocurrencies mature, disrupting finance and many considering them as investments, it is clear that leading coins like Bitcoin are increasingly accelerating the shifting of the power of money creation and control away from central banks and into the hands of individuals.
To quantify, between July 2022 and June 2023, Africa received $117.1 billion in on-chain crypto transactions, according to Chainalysis.
Though representing a small portion of the global share, it shows that more users are willing to use cryptocurrencies’ reliability.
Bitcoin transactions are dominated partly because BTC is seen as a store of value and a hedge against raging inflation.
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Is Crypto Regulation The Way To Go?
Even so, more users are also opting for USDT and stablecoins. It makes sense, especially when dollars were scarce. Stablecoins are the digital versions of the USD, but their pure existence on the blockchain means they can be transferred anytime.
Interestingly, as stablecoins gain market share, Nigerians are resisting the digital Naira, a CBDC. Efforts to push the country towards a cashless economy are not yielding fruit. The situation is worse because, amid these efforts, the government is trying to impose cash restrictions despite Nigeria’s demand for paper cash.
CBDCs are viewed with skepticism as most are concerned about financial privacy and stability.
Whether CBDCs succeed depends on how well the government charms users. The best way to do this is to regulate rather than restrict, as Nigeria’s authorities are doing.
South Africa is doing an excellent job of regulating cryptocurrencies. They are establishing a licensing regime for digital assets and consulting on directives to include crypto in the country’s travel rules.
This regulatory clarity positions South Africa as a leader in the African crypto space. It is despite the political challenges and the formation of a new coalition government.
The Big Headlines In Africa Crypto This Week:
To round things off, don’t miss the following news that made big headlines in the Africa Crypto industry this week:
- Nigeria Binance Case Over? On June 19, a lawsuit filed by Nadeem Anjarwalla, a Binance executive who escaped from detention, was dismissed by a court in Nigeria. Before escaping in March, the executive was detained on claims that they were violating the country’s anti-money laundering laws. In the ruling, the judge nullified the lawsuit, citing the absence of diligent prosecution. Meanwhile, another Binance executive, Tigran Gambaryan, remains in detention.
- Sam Altman’s Worldcoin Reboots in Kenya: After a year-long suspension due to regulatory concerns and alleged privacy breaches contrary to established laws, Worldcoin will resume operations in Kenya. This week, the Directorate of Criminal Investigations (DCI) concluded its investigations before forwarding the file to the Director of Public Prosecutions, who concurred with their findings. Even so, before resuming operations, they must register as a business and obtain all necessary licenses.
- Tanzania Introduces New 3% Crypto Tax: In Tanzania, the Finance Minister has proposed a 3% withholding tax on income from crypto transactions. They also want a 5% tax on income from digital content creation. While the proposal will be debated, the goal is to boost government revenue and broaden the tax base. Meanwhile, the central bank is researching central bank digital currencies (CBDCs), following the likes of Rwanda.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
