The International Monetary Fund (IMF) recently stated in a blog post that the failure of the cryptocurrency exchange FTX and the consequent decline in the cryptocurrency market illustrate the need for improved industry regulation. The blog claims that immediate action is also required in Africa, where the crypto market is expanding quickly, in order to prohibit or deter criminal actors from exploiting crypto assets to assist unlawful operations.
According to the most recent blog post from the international lender, only 25% of sub-Saharan African nations have cryptocurrency regulations in place. Over two-thirds of the region’s governments have enacted some limits, according to the Bretton Woods Institutions’ most recent “Chart of the Week” release.
According to the site, just six nations—Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of Congo—have actually outlawed crypto. Zimbabwe, on the other hand, ordered banks to halt handling transactions involving cryptocurrencies.
In addition to the volatility, the authors asserted that African governments are worried about the use of cryptocurrencies to get around national exchange and capital regulations.
“Policymakers are also worried that cryptocurrencies can be used to transfer funds illegally out of the region and to circumvent local rules to prevent capital outflows. Widespread use of crypto could also undermine the effectiveness of a particular nation’s monetary policy, creating risks for financial and macroeconomic stability.”
The blog post’s writers acknowledged that “many people use crypto assets for commercial payments,” but they claimed that the assets’ volatility disqualifies them as appropriate substitutes for traditional stores of value.
The authors restated the IMF’s view that a decision to legalise bitcoin puts “public finances at risk” in reference to the Central African Republic (CAR), which has already done so. Additionally, the decision by the CAR violates the agreement on cryptocurrency made by the Economic and Monetary Community of Central Africa (CEMAC).
El Salvador, the first nation in the world to accept Bitcoin as legal tender, was also featured in the blog. Starting at the time of Bitcoin’s peak in November 2021, the country has accumulated 2,381 BTC, which is nearly $39.3 million at the current market rate. President Nayib Bukule recently announced on Twitter that El Salvador would buy one BTC every day from November 18.
During the bull market, the profit from the investment was even used to build hospitals and schools. Nevertheless, 77.1% of Salvadorans demand that the government stop “spending public money on Bitcoin” while the country’s economy deteriorates.