African cryptocurrency adoption has exploded in 2020, prompting fears of a heavy-handed regulatory response

By Selena 09/23/20 6:59 AM

It seems that in 2020, Africa is trying hard to adopt and use cryptocurrency in daily transactions and investment more and more. In particular, the volume of P2P transactions in Africa is ranked second compared to other territories. Furthermore, two African countries, Kenya and South Africa, are two of the top eight countries that tend to have the highest cryptocurrency adoption, according to the Chainalysis crypto adoption indexes.

Top 10 countries for crypto adoption | Source: Chainalysis

African cryptocurrency adoption has exploded in 2020, prompting fears of a heavy-handed regulatory response

Nigeria led the continent’s growth in 2020, with weekly P2P volumes between $ 5 million and $ 10 million, followed by Kenya and South Africa, with between $ 1 million and $ 2 million per week.

A representative of leading P2P exchange Paxful stated:

“Africa has been its strongest growing region in 2020. There was also dramatic growth in smaller economies like Ghana and Cameroon.”

Centralized exchanges have also reported a spike in trade activity. In it, Luno said aggregate volumes of $ 549 million from Nigerian and South African customers last month – up 49% from early 2020. Furthermore, the number of new customers signing up has grown by 122%. from the 4th quarter of 2019 to the 2nd quarter of 2020.

Marius Reitz, general manager of Luno Africa, said:

“The increasing demand for crypto is being driven by the benefits that virtual currency offers over the notoriously exclusive local banking sector.”

Cryptocurrency is growing in popularity among the large community of workers living far away from their homeland in Africa, with high foreign exchange fees across the continent, prompting these migrants to explore cryptocurrencies.

He stated:

“The demand we see now is a result of the challenges that people experience across Africa.”

Lagos-based exchange BuyCoins has also seen growth in cross-continental trading with the exchange hosting $ 110 million in cryptocurrencies this year, up from $ 28 million throughout the year. 2019.

However, the growing popularity of cryptocurrencies has also brought tighter legal scrutiny – with analysts in Africa appearing divisive on how best to respond to the cryptocurrency phenomenon.

In April, South African regulators proposed regulations imposing strict licensing and oversight requirements but did not recognize cryptocurrencies as legal tender. Last week, the Nigerian Securities and Exchange Commission (SEC) proposed guidelines that would treat all crypto assets as securities by default.

Stephany Zoo of the Kenya-based exchange Bitpesa said:

“It is important that space is Companies Registry and properly guided by the financial authorities to ensure confidence and protection of the consumer.”

But Reitz warns that hasty and heavy-handed regulation could crush innovation in the industry:

“What we’d like to see is a phased approach. It can be straightforward for regulators to regulate the entire industry from the onset, but it could stifle innovation. Once governments regulate better, there’s more chance of opening up integration with traditional financial infrastructure, and there would be more mass adoption as well.”