December 9, 2022

The IMF called on African countries to develop laws to regulate cryptocurrencies as soon as possible

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The IMF called on African countries to develop laws to regulate cryptocurrencies as soon as possible

The International Monetary Fund (IMF) requires African countries to protect citizens as soon as possible from the loss of funds and from the influence of digital scammers.

The collapse of the FTX cryptocurrency exchange, whichprovoked the fall of bitcoin, ether and other major crypto assets, should encourage regulators to strengthen the protection of the rights of cryptocurrency owners, according to the IMF. Representatives of the international organization recognize that controlling a highly unstable and decentralized ecosystem is a difficult task for most governments. After all, they seek to find a golden mean between the elimination of risks and the desire for innovation.

According to the IMF, only a few African countriessub-Saharan Africa formally regulate the cryptocurrency industry. Six countries: Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of the Congo have banned cryptocurrencies, and in Zimbabwe, banks have stopped processing digital asset transactions.

The authors of the publication refer to a recenta study conducted by Chainalysis, according to which Africa leads in terms of the rate of adoption of cryptocurrencies by society. The largest number of users of digital assets live in Kenya, Nigeria and South Africa. Many people use cryptocurrencies for commercial payments, but due to their excessive volatility, such assets are unsuitable as a store of value, according to the IMF. Cryptocurrencies can be used for illegal transactions and contribute to the outflow of capital from countries, which can undermine the effectiveness of monetary policy, as well as the financial and macroeconomic stability of states, international officials are sure.

IMF officials believe that the risks will worsen,if cryptocurrencies are legalized as a means of payment, as happened in the Central African Republic (CAR). As a result, the Central African Republic has been at odds with the Bank of Central African States (BEAC), which fears that the legalization of cryptocurrencies could jeopardize the state budget.

The IMF did not support the initiative of the Central Bank of Kenya to introduce a digital Kenyan shilling for fear that the state stablecoin could supplant existing digital payment solutions.