When the term “Blockchain Friendly” is utilized with respect to nations that embrace the digital revolution, jurisdictions such as Malta, Singapore and Japan are often at the very top of the list. However, according to a recent Global Digital Report released this week, sub-Saharan African nations appear to be leading the way as the most conducive places to own cryptocurrency.
At the very top of the list was South Africa, which is somewhat surprising, not least because a stringent regulatory framework is yet to exist. The Global Digital Report was based on a 6 month survey conducted in 2018. Backed by digital media firms Wearesocial and Hootsuite, the survey included participants aged between 16 and 64.
Whilst the Global Digital Report survey explored other areas of the online space, its cryptocurrency findings were primarily based on the number of internet users that owned cryptocurrencies. According to the report, the global average currently stands at 5.5%. South Africa almost doubles the global average, with 10.7% of online users currently in possession of at least one form of cryptocurrency. Just behind South Africa was Thailand and Indonesia, which amounted to 9.9% and 9.5% respectively.
South African Government yet to Spearhead Blockchain Regulation
Whilst the report argues that South Africa has the largest number of internet users who are financially involved in the cryptocurrency space, the findings are somewhat surprising. The key reason for this is that South Africa is yet to install a framework to regulate the cryptocurrency and blockchain technology arena. Whilst stringent regulation is the case in the nation’s traditional financial services industry, this is yet to exist in the world of blockchain assets.
Taking this in to account, the South African Reserve Bank have been exploring methods that will provide domestic users with an element of protection.
The central bank note that cryptocurrencies should potentially remain without a specific legal tender status, not least because it may have the result of recognizing them in the same light as electronic money. Moreover, the South African Reserve Bank also note that third party cryptocurrency services providers (exchanges) should be required to go through a registration processes, once a regulatory framework has been initiated.
The central bank note that:
“The phased approach, starting with the registration requirement, could lead to formal authorization and designation as a registered/licensed provider for crypto asset services operating in South Africa at a later stage,”.
Nevertheless, South African recently installed a call-to-action for domestic stakeholders to propose suggestions pertaining to cryptocurrency regulation.
Usage of Cryptocurrencies in Africa Continues to Rise
Whilst regulation within the African continent is still in its absolute infancy, this hasn’t stopped domestic users from embracing the cryptocurrency space. For example, peer-to-peer Bitcoin exchange Paxful noted that in 2018, those from Africa constituted the largest proportion of cryptocurrency trading on its platform. Chief Executive of U.S. based Paxful, Ray Youssef, notes that African usage soared 225 percent in 2018, adding that monthly transactions average $64.5 million.
Regarding the Global Digital Report findings, other African nations such as Kenya and Ghana also scored highly. One of the key reasons that African citizens have an appetite for cryptocurrencies is the fact that they are a potential alternative to storing wealth. As emerging currencies used on the African continent are often unsustainable, Bitcoin allows users to store wealth free from the threats of governmental uncertainty.
Not only this, but with Africa one of the leading destinations with respect to remittance payments, cryptocurrencies allow users to send funds to family and friends in a fast, efficient and ultra-low-cost manner. On the contrary, traditional financial remittance systems are often expensive, slow and full of red tape.