In recent years, the adoption of cryptocurrencies has increased exponentially across the globe. However, some parts of the world have proven to be more anxious about adopting crypto than others.
Africa to Introduce Tighter Crypto Regulations
Africa is among the regions of the world where the adoption level of cryptocurrencies is quite high. There is a strong need to make sure that the regulatory framework for crypto is up to the mark.
As of now, it cannot be said whether the current regulatory infrastructure in Africa is strong and firm enough to deal with the expansion of the cryptocurrency industry.
The International Monetary Authority has raised the same concern over cryptocurrency regulations in Africa.
Therefore, it has taken the liberty of asking the African authorities to ensure that strict cryptocurrency regulations are introduced.
When firmer crypto regulations have been introduced and are practiced, things would become streamlined not only for the regulators but the users as well.
The IMF has also revealed the true reason they have asked for such steps to be taken. The authority revealed that as per their data, Africa is among the fastest-growing markets when it comes to crypto.
Reason for Strict Regulations
It is a region where the vast majority of countries are dealing with low economies. Therefore, people are more welcoming towards revenue-generating channels that are not traditional.
As cryptocurrencies are the best way to circumvent traditional banking and financial solutions, people in the region are attracted to them.
With the crypto adoption rising in the region and the countries having no way to track them, no taxes would be implemented on crypto transactions.
This would eventually impact the revenue generation of the countries. With the country not having many revenue generation channels, the country’s economy would start to weaken.
The next thing would be the weakening of the already weakened values of the majority of the fiat currencies in the African region.
According to the monetary authority, another major concern apart from the market downfall is money laundering. This is a global issue that many developed countries have been trying hard to handle.
The African regulatory authorities also need to ensure that they have a proper and effective anti-money laundering system in place to deal with such illicit transactions.
Such transactions not only cause a negative impact on a country’s economy but also on its global reputation.
Money laundering activities may lead to many disasters and the major one is the funding of terrorist groups.
Long Term Benefit for the Crypto Industry
As per the IMF’s research, only 25% of the total countries in Sub-Saharan Africa (SSA) have a regulatory infrastructure for crypto. The rest are without that so it is necessary a proper framework is introduced.
It is obvious that as crypto regulations are enforced in the region, a major downfall may be recorded in the crypto market.
This is because many people may stop investing in crypto as taxes get implemented on their holdings. However, with the passage of time, things would start getting settled.
When that happens, the cryptocurrency industry would grow stronger and it will also witness a major boost to the overall valuation.