Cryptocurrency regulation tests are underway in Zambia with the aim of shaping crypto laws by simulating real-world use of digital assets. Zambia’s innovation, science, and technology minister, Felix Mutati, highlighted the government’s goal of striking a balance between innovation and citizen safety in the volatile crypto market. The tests, which began on February 19, are being conducted by Zambia’s central bank and securities regulator, and are set to be completed by June.
Mutati emphasised the need for digital infrastructures, including digital identities, to be implemented before cryptocurrencies can be introduced. He previously stated that digital payment platforms and cryptocurrencies could drive financial inclusion and be a game-changer for Zambia’s economy.
Zambia, which was the first African country to default during the COVID-19 pandemic in 2020, has been restructuring its debt, with the largest portion owed to creditors from China. While the debt restructuring process has been long delayed, Mutati expressed confidence that it has not deterred investment in Zambia, noting an increased appetite to invest in the country.
Several African countries have been making moves towards cryptocurrency adoption in recent times. The Central African Republic (CAR) made Bitcoin legal tender in April 2022, accompanied by a regulatory framework for cryptocurrency use. Nigeria also plans to pass a new law recognizing cryptocurrencies as capital for investment, despite banning crypto activity in 2021.
However, the lack of cryptocurrency regulations in many sub-Saharan African nations has raised concerns. The International Monetary Fund (IMF) recently highlighted the need for improved industry regulation, citing the failure of the cryptocurrency exchange FTX and the potential exploitation of crypto assets for unlawful operations. According to the IMF, only 25% of sub-Saharan African countries have cryptocurrency regulations in place.
The completion of cryptocurrency regulation tests in Zambia by June is expected to contribute to shaping crypto laws in the country and provide insights into the real-world implications of digital assets. As African countries continue to adopt cryptocurrencies, the need for proper regulation becomes increasingly crucial to ensure the safe and responsible use of these emerging financial technologies.