1. The International Monetary Fund wants to regulate the crypto assets in Africa.
2. Africa has many crypto users but is challenged by the risks.
3. The Central African Republic fell out with CEMAC because of their treaty.

The IMF, or International Monetary Fund, feels it is time to press strict regulations to protect consumers, considering the recent disturbances in cryptocurrency. FTX, which was the third largest crypto exchange agency in the world, has completely fallen, and there is a significant dip in the price of Ethereum.

The power of crypto is centralized to the power of a few people, and hence decentralization of this system is a big challenge for the government. Also, the cryptocurrency system is very spontaneous and volatile, so maintaining a balance between working with innovation while reducing the risks is also a challenge.

According to the reports of the IMF, one-quarter of the countries in Africa have formal rules and regulations for crypto. The other two-thirds of Africa, including countries like Ethiopia, Sierra Leone, Cameroon, Lesotho, Tanzania, and the Republic of Congo, have entirely banned the use of crypto. Zimbabwe has stopped the transaction of banks, and Liberia has banned any startup involving cryptocurrency.

According to the reports of Chain analysis, although Africa is the fastest-rising crypto market in the world, its transactions are minimal, up to $20 billion per month. The countries like Kenya, South Africa, and Nigeria frequently use crypto assets, but they are challenging to manage because of their Volatility.

Policymakers doubt that cryptocurrency might be used illegally to transfer money out of the country. At the same time, if a cryptocurrency is ever adopted as the legal currency, then it could risk public finances. The Central African Republic is the first African country that recently adopted cryptocurrency as a legal tender which puts it at risk.

By adopting crypto as a legal tender, it violates the treaty with the Economic and Monetary Community of Central Africa (CEMAC). Also, it has a bad relationship with the Bank of Central African State (BEAC). A transaction using crypto has been banned in the CEMAC region by the banking sector of BEAC.

Posted Date: May 26, 2023