Zambia is stepping up its efforts to regulate cryptocurrencies as it seeks to achieve an inclusive digital economy. The Bank of Zambia and the country’s securities regulator are currently testing the technology to enable the regulation of cryptocurrencies, according to Technology and Science minister Felix Mutati. The minister claims that “cryptocurrency is the future that the country desires to achieve,” but a policy framework is needed to support this “revolutionary technology.” The testing of the technology to regulate cryptocurrency will be scaled up as part of deliberate measures to achieve an inclusive digital economy for Zambia.
The African nation is also aiming to become a technology hub in Africa, with plans to develop digital infrastructure and attract investments in the sector. According to Mutati, “through digital payment platforms, people will become much more included in digital financial services, hence cryptocurrency will be a driver for financial inclusion and a change maker for Zambia’s economy.”
It’s government signed a memorandum of understanding with Overstock’s blockchain land registry subsidiary in 2018. Under the agreement, Overstock’s Medici Land Governance would work with Zambian authorities to reform land ownership, providing local rurals digital ownership certificates and access to the financial markets.
Zambia’s move to regulate cryptocurrencies is part of a growing trend in Africa, where authorities are paying close attention to the sector. A recent report from the Central Bank of Nigeria urged the development of a regulatory framework for stablecoins and initial coin offerings. Nigeria is one of the world’s pioneers in central bank digital currency adoption.
The International Monetary Fund (IMF) recently raised concern and called for increased regulation of Africa’s crypto markets. In November, the IMF highlighted the need for regulatory frameworks to be put in place, as the region’s crypto industry continued to grow. The IMF cited the collapse of FTX and its ripple effect in cryptocurrency prices as among the reasons for embracing regulation.
Africa’s crypto market increased by more than 1,200% between July 2020 and June 2021, and almost doubled its growth with Kenya, South Africa, Nigeria, and Tanzania leading adoption. However, despite the growth of the sector, there are concerns over the potential risks posed by unregulated cryptocurrencies, such as money laundering, terrorism financing, and fraud.
The move to regulate cryptocurrencies in Zambia and other African countries is seen as a positive step towards providing a safe and secure environment for investors, while also promoting financial inclusion and economic growth. As more countries in the region begin to explore the potential benefits of cryptocurrencies, it is expected that the sector will continue to grow and evolve.