You would be amazed by the level of acceptance of crypto-currency in Africa. Although Africa may not be the first location to note while discussing crypto, it proves to be a fertile ground for advancing the blockchain revolution.
Bitcoin Demand in Nigeria
In West Africa, bitcoin is nothing new to many Nigerians. It is estimated that the area trades on a weekly basis of over $4 million in cryptocurrencies. If consideration is also given to OTC trades, the figure may be much larger.
Nigeria’s approach to cryptocurrency regulation has been mixed. A “wait and see” direction has greatly hindered the growth of cryptocurrency adoption in Nigeria.
The government has issued warnings about the volatile nature of cryptocurrencies in the past, but it has not issued concrete laws that fully cater to the pressing needs of the cryptocurrency industry.
Fintech have, for a long time, been at the receiving end of unfavourable government laws and regulations.
An example of the government’s oppressive treatment of fintechs in Nigeria is highlighted by its proposed licensing scheme for the increment of the minimum investor funds for fin-tech companies to as much as $15 million.
Policies such as these could prevent most firms from joining the crypto-markets if made applicable. Regulatory costs typically increase with the enforcement of such policies. Such costs may be passed on to customers.
This is a policy that could, if implemented, limit the entrance of many firms into the crypto-markets. Consumers of cryptocurrencies in Africa may, therefore, be impacted by higher service costs.
Blockchain Foray into Regulatory Technology
Again, the shadow economy could prove to be too large for regulators to limit cryptocurrencies ‘ eventual mass adoption. In Nigeria, there is a shadow economy in food markets, clothing markets and other industries where it is impossible to formally ascertain the measure of economic activity.
The decentralised nature of blockchain and cryptocurrencies is such that it is almost impossible if not impossible for a regulator to have full oversight. Even in formal economies, regulation of the financial system is never fully successful. To this end, it is clear that insurance against fraud and lack of transparency is the blockchain itself. This is why so many more people continue to adopt cryptocurrencies in Africa.