Ethiopian authorities now require all crypto businesses to register with the Information Network Security Administration (INSA) in ten days.
The crypto registration scheme was made possible by the amendment of a law that gave the INSA power to supervise cryptographic products and transactions.
The initiative comes as Ethiopia looks for a legal framework to deal with the growing interest in cryptocurrency mining and investment, sectors once banned by the National Bank of Ethiopia (NBE).
The governor for the NBE told CGTN news in June 2022 that the central bank’s rules and regulations only recognize paper money and that there would be legal consequences for people transacting in cryptocurrency. He added that the bank would conduct further studies.
Ethiopia wants to blaze a trail in the cybersecurity space
Companies operating without registering with the INSA will be prosecuted. The INSA claimed it had averted 97% of cyber-attacks leveled at the country since July 2021, saving Ethiopia roughly $26 million. Through its registration scheme, Ethiopia wants to be the first African country to offer investors protection from criminal crypto enterprises from a cybersecurity perspective.
Ethiopia lags Kenya, South Africa, Egypt, and Nigeria with 1.8 million crypto holders. High black market prices for the scarce U.S. dollar encouraged crypto adoption through nine local exchanges in Ethiopia.
Cryptocurrency exchanges can become the target of cybersecurity hacks as they process and hold large volumes of digital assets. The most notorious example is the multi-million dollar hack of a Japanese crypto exchange Mt. Gox in 2014. In Dec. 2021, hackers made off with $200 million from Bitmart, another trading platform.
A hacker could target a victim by offering to double their money after they make an initial investment. The hacker could then make off with their cryptocurrency, leaving the investor holding the bag.
Attackers could also use keyloggers or different malware programs to get people to reveal their personal information and then sell it on the dark web for small amounts of cryptocurrency.
Uganda clamps down, CAR headed for trouble
Between Oct. 2019 and Feb. 2020, five cryptocurrency companies in Uganda closed their doors, taking $26 million worth of customer funds. In Feb. 2021, the Ugandan parliament criminalized Ponzi schemes costing investors $2.7 million and penalized payment providers that made crypto transactions possible.
The Central African Republic’s recent adoption of bitcoin as legal tender was slammed by experts who warn that the country could have opened itself up to financial crime. One expert believes that bitcoin makes illegal transactions possible for the Wagner Group, a Russian paramilitary organization vying for the country’s sovereignty.