Why Crypto Hasn't Taken Off In Francophone Africa Yet

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So far, there seems to be no legal framework that clearly addresses crypto currencies in Madagascar, West or Central French-speaking Africa. We have, however, noticed some attempts made by the BCAC in the Central African region to initiate this process, and some sound pretty promising. Nevertheless, the legislative infrastructure as well as the existing economic environment suggest that there may be more challenges than opportunities with regard to the popularization of cryptocurrencies.

Madagascar has still not adopted any laws or regulations on cryptocurrency. There is no visibility for when this could happen.

A short report on cryptocurrency dated 14 March 2022 published on the website of the Banky Foiben’i Madagasikara (the Central Bank of Madagascar, or BFM) – which covers a couple of points (e.g., the definition of cryptocurrency, how a cryptocurrency-related transaction works, etc.) – does not provide any further insight on how, if at all, cryptocurrencies might be regulated in the future. The report does however state that the BFM has opted for the creation of a ‘numerical version’ of the Ariary (the local currency). This is a digital version of the local currency (i.e., e-Ariary) issued by the BFM that could one day be used in Madagascar for payment purposes. There is, however, no additional information on this in the report regarding how exactly it would work, when it could be created, whether it would be considered as a cryptocurrency, etc.

The last official communiqué of the Central Bank on cryptocurrency was dated 5 October 2021. In this communiqué, the Central Bank (i) confirms that cryptocurrencies are not regulated in Madagascar, (ii) warns the public of risks associated to cryptocurrencies and (iii) recommends the public to exercise caution when involved in cryptocurrency-related activities.

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Cryptocurrency regulations in the UEMOA countries are still not established.

The parliament of the Communauté économique des Etats de l’Afrique de l’Ouest (CEDEAO) or the Economic Community of West African States (ECOWAS), in English, organized a delocalized meeting under the theme “Cryptocurrency as a facilitator of community trade in West Africa” from 6 to 10 July 2021 in Ouagadougou, Burkina Faso. This meeting was intended for ECOWAS members of the parliament to better understand the challenges of cryptocurrency and to assess the need of regulation, thereby preventing the misuse of cryptocurrency in West Africa.

Regarding Togo, cryptocurrency is frequently used in the country even though there is no specific regulations or law in this field. However, the use of cryptocurrency is neither expressly authorized nor specifically prohibited. Nevertheless, the state did request on 30 March 2021, through letters of formal notice, the closure of companies operating in the trading of cryptocurrencies. According to the Banque Centrale des Etats de l’Afrique de l’Ouest (BCEAO), its Governor has advised the population against trading in cryptocurrency as they are not auditable and there is no competent institution responsible in Togo answerable to the authorities.

Furthermore, in an official communiqué signed on 18 March 2021, the Conseil Régional de l’Epargne Publique et des Marchés Financiers (CREPMF) warned people, telling them to be vigilant and asking companies specialized in trading cryptocurrency to cease their illegal activities. The CREPMF informed the public of the Monetary Union and specifically residents of Benin, Niger and Togo of the recurrence of “investment” offers with promises of high return. Companies including Global Investment Trading (Liyeplimal), Global Trade Corporation, High Life and Chy Mall, were named, all reportedly specialised in cryptocurrency trading, as well as buying and selling goods online, and stated that all were considered as conducting illegal activities.

For now, it is clear that none of the West African countries recognizes cryptocurrency as a legal currency. As a result, none of the countries in the UEMOA zone has adopted a specific regulation/law on cryptocurrencies, relying on this defecto prohibition. The ECOWAS Parliament has organized multiple meetings regarding cryptocurrencies in West Africa. However, they have yet to make a conclusive decision regarding the regulation in this field and we have no visibility on when this could finally take place.

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Cryptocurrencies are banned in the CEMAC zone until regulations are put in place.

In a communiqué dated 23 October 2020, the Commission de Surveillance du Marché Financier de l’Afrique Centrale (COSUMAF) warns the public that there is no regulatory framework for the exercise of cryptocurrency-related activities in the CEMAC zone, effectively prohibiting the provision of these services. In other words, the COSUMAF has effectively banned transactions related to cryptocurrencies in the CEMAC zone and this ban will remain in effect until a regulation on the use of cryptocurrencies is put in place. The implementation of cryptocurrency regulation was envisaged for the end of 2021, but the COSUMAF has not passed any cryptocurrency laws/regulations to date, and there has been no official statement on when this might finally happen.

With the promise of the imminent arrival of a regulatory framework for cryptocurrencies and their growing importance in the country, Cameroon made proposals to regulate the use of cryptocurrencies at a seminar last year. Organized by the Ministry of Posts and Telecommunications on 15 November 2021, under the theme: "Challenges, Opportunities and Risks of Cryptocurrencies in Cameroon”, the outcomes from the seminar allowed the formulation of synthetic proposals to regulate the use of virtual currencies in Cameroon. This remains an indicative proposal without legal status.

Furthermore, the Banque des Etats de l’Afrique Centrale (BEAC), through a Lettre de la recherche – research note published on its website on 2 March 2022 – has identified some of the challenges that could arise should the BEAC launch its potential central bank digital currency (Monnaie Numérique de Banque Centrale or MNBC) to counter the rise of cryptocurrencies. Nevertheless, given the risks associated with the decision to issue a digital currency (i.e., the MNBC), the BEAC states that an MNBC does not present itself as an alternative to cryptocurrencies and is even likely to disrupt the existing system. In other words, the BEAC remains reluctant to consider the creation of a digital currency in the CEMAC zone.

The implementation of regulation regarding cryptocurrencies is becoming urgent given the growing number of operators offering “investment services” (genuine or otherwise) in the cryptocurrency markets in Central Africa. For now, none of the countries in the CEMAC zone has officially adopted a specific regulation/law on cryptocurrencies.

Sources

Tags: Banky Foiben’i Madagasikara CEMAC cryptocurrencies cryptocurrency madagascar regulations UEMOA West Africa