IMF urges tougher cryptocurrency regulation in Africa

The International Monetary Fund (IMF) proposed that authorities of African states implement tougher oversight of digital assets to strengthen consumer protections.

As a justification, economists pointed to the collapse of FTX and the associated decline in cryptocurrency prices.

In their view, a balance is needed between minimising risks, which have become evident, and maximising innovation. The adoption of digital assets as legal tender would threaten public finances, experts warned.

The document also states that cryptocurrencies could be used for illicit transfers and violations of capital-flow regulations.

Broad use of digital assets could also undermine the effectiveness of monetary policy, creating risks to financial and macroeconomic stability.

According to the IMF, 25% of Sub-Saharan African countries officially regulate cryptocurrency, while two-thirds have imposed some restrictions.

Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of the Congo have banned cryptocurrencies.

Kenya, Nigeria and South Africa have the largest number of users in the region, economists noted.

Back in 2019, former Twitter chief Jack Dorsey said that Africa would define the future of Bitcoin.

Earlier, KuCoin analysts estimated that in 2021 the average number of monthly crypto transactions in the region rose by 1,386.7%.

Experts from Chainalysis assessed that the growth of this indicator in Africa from July 2020 to June 2021 was 13-fold.

In April 2022, the Central African Republic made Bitcoin legal tender alongside the local franc.

Earlier this was done by the authorities of El Salvador, for which they were repeatedly criticized by the IMF, including in January this year.

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