Catherine Karimi
Estimated reading time: 6 minutes
The use of cryptocurrency is fast rising across Africa, driven by various variables such as remittance services, economic stability, and financial inclusion. As traditional banking infrastructure strains to satisfy the demands of a rising and increasingly tech-savvy population, cryptos provide a viable option for financial transactions and wealth storage. This digital revolution is most visible in many important countries where crypto usage is increasing.
Furthermore, the region is experiencing a surge in interest in crypto mining, bolstering its position in the global crypto landscape. The following are the prominent African countries that have adopted cryptocurrencies and provide an overview of mining activity across the continent.
Table of contents
Nigeria
Nigeria is leading the way in countries in Africa that use cryptocurrency. Nigerians are trading cryptos on peer-to-peer (P2P) platforms such as Paxful and LocalBitcoins despite regulatory obstacles. P2P trading significantly increased when the Central Bank of Nigeria (CBN) first forbade banks from dealing with cryptos.
Nigeria also introduced the eNaira, a central bank digital currency (CBDC), in an effort to provide a regulated digital currency option. The country’s high rates of inflation and youthful population have fueled the emergence of cryptos as an alternative financial system.
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South Africa
South Africa is another prominent player among African countries using cryptocurrency. The country’s well-developed financial infrastructure and friendly regulatory climate have facilitated crypto adoption. The South African Reserve Bank (SARB) now recognizes crypto as a financial commodity, clearing the road for full regulations.
Major stores such as Pick n Pay have started accepting Bitcoin, illustrating the growing use of cryptos in everyday purchases. South Africa’s solid regulatory system encourages businesses to establish operations on the continent.
Recently, the number of Crypto Asset Service Provider (CASP) licenses in South Africa increased to 138, with the country’s Financial Sector Conduct Authority (FSCA) approving 63 more.
With this action, South Africa is demonstrating its resolve to control the crypto business and safeguard consumers against dangers such as fraud and money laundering. Having received 383 applications, the FSCA rejected several due to insufficient business plans or lack of experience with crypto assets. This rule asserts that crypto assets are not accepted as legal cash and aims to promote safety and transparency in the sector.
Kenya
The tech sector in Kenya, known as the “Silicon Savannah,” has embraced cryptos, especially for microtransactions and remittances. While official laws are still in draft form, the Central Bank of Kenya (CBK) is investigating the potential of digital currencies. Meanwhile, the local crypto community has resisted the Digital Asset Tax (DAT), included in the Finance Bill 2023, which imposes a 3% tax on trading digital assets. Kenya continues to be a major participant in the East African crypto sector despite regulatory obstacles.
Ghana
In countries in Africa that use cryptocurrency, Ghana is seeing a steady increase in Bitcoin use, driven by the desire for financial inclusion and efficient cross-border transactions. The Bank of Ghana (BoG) is testing the eCedi, a CBDC designed to supplement traditional payment systems.
Ghanaian users have shown an increasing interest in digital currencies, with significant activity on crypto exchanges such as Paxful and Binance. Educational programs and developer-oriented activity boost Ghana’s potential for crypto adoption.
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Uganda
Uganda is starting to gain prominence in the African crypto scene. Two of the main factors influencing this trend are the country’s youthful population and rising internet usage. Crypto is used for savings, investing, and transfers.
Although extensive crypto legislation is still under development, the Ugandan government supports blockchain technology. Due to the increasing number of people using digital currencies to make ends meet, Uganda’s crypto market is expanding.
Morocco
Despite strict regulations, Morocco is the leader in crypto activity in North Africa. The nation has many crypto owners, and P2P trading activity is substantial. Morocco has a lot of potential in the crypto mining industry, as evidenced by an American private equity firm’s building of a 36-megawatt Bitcoin mining farm.
The central bank of Morocco announced plans to draft a crypto bill that will establish the legal parameters for virtual currencies, a sign that the country’s authorities are progressively shifting toward more liberal regulations.
Ethiopia
Ethiopia is set to become among the first African countries to begin Bitcoin mining, utilizing its renewable energy resources. The government has formed partnerships with foreign corporations to construct large-scale mining operations that will use the country’s hydroelectric electricity.
This action aims to position Ethiopia as a major player in the global Bitcoin mining business, opening up new economic opportunities and contributing to the growth of Africa’s crypto ecosystem.
Conclusion
Africa’s adoption of cryptos is diverse and driven by local obstacles as well as unique opportunities. Even though legal systems vary from one continent to the next, digital currencies are generally becoming more accepted and integrated.
As more people on the continent adopt cryptocurrencies for financial inclusion, remittances, and economic stability, Africa is poised to become a major player in the global crypto industry. This increasing uptake not only demonstrates Africa’s inventiveness but also its capacity to take the lead in the digital financial revolution.
FAQs about which countries in Africa are using cryptocurrency
The need for efficient remittance services, better financial inclusion, and a safeguard against economic instability drive cryptocurrency adoption in Africa, along with the demand from the youthful and tech-savvy population for innovative financial solutions.
Nigeria is at the forefront of cryptocurrency adoption in Africa, primarily through its vibrant peer-to-peer (P2P) trading on platforms like Paxful and LocalBitcoins. Despite regulatory challenges, the introduction of the eNaira as a central bank digital currency (CBDC) also marks a significant step towards embracing digital currencies.
In South Africa, the regulatory environment is quite proactive, with the South African Reserve Bank (SARB) recognizing crypto as a financial commodity. This recognition has paved the way for detailed regulations, including the issuance of Crypto Asset Service Provider (CASP) licenses to foster a secure and regulated crypto market.
In Kenya, cryptocurrencies are predominantly used for microtransactions and remittances. Despite pending regulations, the local crypto community is actively engaging with and challenging fiscal policies like the Digital Asset Tax. In Uganda, the government’s positive stance towards blockchain technology supports the increasing use of cryptocurrencies for savings, investments, and transfers.
Morocco is seeing growth in crypto mining activities, highlighted by an American private equity firm building a 36-megawatt Bitcoin mining farm. Ethiopia is leveraging its renewable energy resources to set up large-scale Bitcoin mining operations in collaboration with international companies, aiming to position itself as a key player in the global Bitcoin mining industry.
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The African Crypto
Ian Kirimi
