It has been a bumpy ride for Africa’s crypto industry since the conception of Bitcoin in 2008. Though the continent was the last to plug into the decentralized way of sending and receiving money, it has been the world’s fastest-growing crypto market.

In the initial years of crypto adoption – between 2012 and 2018 – the crypto market in Africa grew at a very slow rate, thanks to the many reports of fraud, scams, and money laundering as bad actors　capitalized on people’s lack of knowledge about cryptocurrencies.

This necessitated the urgent need for regulation. Startup founders believe if laws are enacted to weed out fraudsters in the industry, then crypto adoption would be easier. Here, regulation becomes a critical business enabler.

So far, only one-quarter of the countries in sub-Saharan Africa have regulated cryptocurrencies, according to the International Monetary Fund. While some governments have an outright ban on crypto, many are keenly watching the space despite advising their citizens against crypto use.

Here is what we know about recent moves on crypto regulations by major economies on the continent.

Nigeria: Govt Pushes CBDC, Crypto Boom Goes On

In 2021, the Nigerian government warned that banks should not engage in business with crypto entities. This had briefly slowed the pace of the country’s crypto boom, but the pace of crypto adoption by individuals has eventually increased in the last 2 years.
The Central Bank of Nigeria (CBN) has had a tough stance against cryptocurrencies. Though the Securities and Exchange Commission (SEC) has overly been accommodative to crypto, it now says it will not regulate cryptocurrencies, noting that they infringe public policy and are injurious to investors.
But the government has a running Central Bank Digital Currency (CBDC), the e-Naira, introduced in 2021 – the first on the continent. The government is in talks with technology partner companies to develop a better system to run the e-Naira, Bloomberg reported in February 2023. All eyes are on Nigeria, which has 33.4 million crypto traders, on how the e-Naira will help it achieve better accountability.
In March this year, president elect Bola Tinubu said in his manifesto the government plans to increase the use of blockchain for the country’s banking sector.

Kenya: Nairobi Still Wishy-Washy

In December 2015, the Central Bank of Kenya published a public notice on cryptocurrencies led by bitcoin. The similar comment was made by the bank in March 2022, warning of the potential risks associated with peer-to-peer crypto trading.
While voicing concerns over crypto usages, the central bank last year formed a committee to look into crypto regulations. The committee members comprise the central bank, the Capital Markets Authority (CMA), the Insurance Regulatory Authority (IRA), the Retirement Benefits Authority (RBA) and the Sacco Societies Regulatory Authority (Sassra).
Apart from a crypto regulation push, another law draft (the Capital Markets Amendment Legislative Proposal 2023) was written in a bid to levy tax on crypto trade gains. The bill is yet to be tabled.
Despite warnings by the central bank against cryto trade, the crypto adoption has been rising, from 4.1 million users in 2021 to 6.1 million users in 2022.
What makes the government appear wishy-washy is the fact that in February 2022, the central bank issued a discussion paper assessing the applicability of a central bank digital currency (CBDC) in the country and seeking public participation on how best to roll out a CBDC.

South Africa: Leading Africa in Proactive Steps

South Africa has clearly taken proactive approach to address the regulatory requirements around crypto assets, the PwC said in its latest report.
In August 2022, the country’s financial regulator known as the Prudential Authority (PA) issued a guidance for banks on anti-money laundering (AML) and countering the financing of terrorism (CFT) controls in relation to crypto assets and crypto asset service providers.
In October the same year, another financial regulator, the Financial Services Conduct Authority (FSCA) declared crypto assets a financial product, then requiring crypto advisory firms and intermediary service providers to apply for a licence by November 2023.
The South African Reserve Bank (SARB) is doing research on a potential CBDC, while the central bank has moved ahead with projects to look into other types of tokenized money.

Central African Republic (CAR): Bitcoin Becomes Legal Tender

The Central African state surprised everyone when its parliament approved the use of bitcoin as legal tender in April 2022. Following into the steps of El Savador, CAR took the bold step of leading Africa on this prong.
However, in July 2022, the Bank of Central African States (BEAC) issued a statement declaring the CAR’s bitcoin law “null and void” and in violation of the banking rules of the regional bloc.
In support of BEAC, the IMF noted that CAR’s move “raises major legal, transparency, and economic policy challenges.”
The Office of the President has maintained that the new law will play a big role to “improve the conditions of Central African citizens.” In an ambitious tone, it called the use of bitcoin in daily transactions “a decisive step toward opening up new opportunities for our country”.
But many challenges tied to crypto education, blockchain infrastructure, internet penetration, smartphone adoption, access to electricity, and generally weak economy still hold back the country from mass adoption of crypto.

Uganda: Murky Crypto Waters

In October 2019, Uganda’s ministry of finance issued a public notice (pdf) acknowledging that cryptocurrencies are digital assets. But it has not licensed any organization in Uganda to facilitate the trade in cryptocurrencies.
In May 2022, the Bank of Uganda (BoU) warned all payment service providers, including mobile money operators, against facilitating crypto transactions, saying that cryptos had opened the country to fraudulent deals, money laundering, scams and sale of illicit goods.
In February 2022, the Ugandan parliament began criminalizing Ponzi schemes which have often been associated with cryptocurrencies, and have led to loss of money by many citizens.
In January 2022, 10,000 members of the infamous Dunamiscoins scam allegedly lost $2.7 million. Five other cryptocurrency firms have reportedly stolen more than $26 million from clients between October 2019 to February 2020. Estimates show that 200,000 Ugandans have lost about $1 billion, or almost 4% of the country’s GDP of $28 billion between 2018 and 2020.
Finance minister David Bahati disclosed in 2022 that the government had established a task force to explore cryptocurrencies and their potential applications in Uganda but maintained the central bank’s stance on the use of crypto.

Zambia: Making a New Move

In the southern African country, a new development to study and introduce a cryptocurrency framework is in the works, according to Reuters reported in April 2023.
Zambia plans to simulate real-world cryptocurrency usage this year before working on creating regulations.
Like Kenya and Nigeria, Zambia’s initial response to the crypto adoption boom in the past few years was to warn the public on the potential risks of crypto trade.
In 2018, the Bank of Zambia announced it does not oversee or regulate crypto market, but there is certainly changes in the government’s stance toward crypto since then.
Zambia is among the countries with the highest levels of poverty, according to a World Bank report. More than 61% of its 19.6 million people earn less than the international poverty line of $2.15 a day, compared to 41% across the sub-Saharan Africa.

Zimbabwe: Gold Mining Country Goes With Gold-Backed Money

Zimbabwe, one of Africa’s leading gold miners, will soon introduce a gold-backed digital currency as a part of its efforts to stabilize the country’s local currency, the Sunday Mail reported on April 23. John Mangudya, Governor of The Reserve Bank of Zimbabwe (RBZ), told the press that introduction of the digital gold tokens will represent the first step towards using the nation’s gold reserves to anchor the Zimbabwe dollar.
The Zimbabwe government has so far ordered all banks to stop processing transactions of crypto.

Mauritius: Rich African Country Moves Quickly on Regulations

Mauritius, one of Africa’s richest countries in terms of gross national income (GNI) per capita, has adopted a legislation on crypto (virtual assets) and initial token offerings, according to the PwC report.
In February 2022, the Virtual Asset and Initial Token Offering Act 2021 was enacted, showing the government’s commitment to developing the crypto sector.

Egypt: Don’t Even Think About it

In 2018, Egypt’s Islamic legislator Dar al-Ifta issued a religious decree banning the use of cryptocurrencies, and labelling them as haram (prohibited under Islamic law), noting that cryptocurrencies could damage national security and centralized financial systems, and could also be used to fund terrorism.
In September 2022, the Central Bank of Egypt (CBE) issued a fresh warning about cryptocurrency, with violators subject to imprisonment. The law prohibits issuing, trading, or promoting cryptocurrencies. The first warning was issued in March 2021. It remains illegal to trade in cryptocurrency in Egypt, you can be jailed and pay a fine of up to $325,000.
However, there are over 3 million people who currently own cryptocurrency, according to 2022 data by Triple A.

Tunisia, Morocco, Algeria: Big No to Crypto

Like Egypt, these countries have enacted absolute bans on crypto, largely informed by their Islamic laws that preach against investing in virtual financial systems. About 20% of sub-Saharan African countries have banned the trade of crypto assets, according to the IMF.
If crypto goes mainstream in the continent, these will be the last countries to plug in. However, there have been a number of blockchain startups in these economies.

Ethiopia, Tanzania, Chad, Namibia, Cameroon, Benin, Burkina Faso, Togo, Senegal, Niger, Lesotho, Libya, Gabon, DRC, Ivory Coast, Burundi: Yes and No to Crypto

These countries have implicit bans on crypto. Implicit bans mean that the government prohibits banks or other financial institutions from dealing in cryptocurrencies or offering services to people or businesses that involve crypto.
Despite these 16 central banks’ warnings against the use of crypto, many citizens have invested in the industry. The governments of the countries are still observing crypto trends worldwide before making a decision on how to regulate crypto.

-Edited by Shigeru Sato, Faustine Ngila