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Zambia to Regulate Crypto Amid Growing African Adoption

2 mins
Updated by Geraint Price
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In Brief

  • Zambia's finance minister said the country would develop new crypto regulations at the end of a technology pilot designed to simulate real-world crypto usage.
  • The country had previously warned citizens that cryptocurrency trading offered no legal protections, but accepted the utility of blockchains.
  • Jack Dorsey's payments company Block argues the merit of cryptocurrency transfers that do not require African government approval.
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Zambia will complete simulations of cryptocurrency use by the end of June to help it form new crypto regulations aimed at striking a balance between innovation and consumer protection.

The finance minister, Felix Mutati, said a robust digital infrastructure is critical to adopting digital currencies in the region.

Zambia Makes U-Turn After Crypto Warning in 2018

He added that the usage tests would help develop crypto regulation in the southern African nation. 

The announcement comes almost two months after The Bank of Zambia and the Securities and Exchange Commission said they would test the technology needed to regulate crypto. The announcement coincided with a visit by Ethereum co-founder Vitalik Buterin to the country to discuss Ethereum’s potential.

Zambia had previously discouraged citizens from cryptocurrency trading, warning that the financial system provided them with no legal protection.

However, it also conceded that blockchain could “prove to be positively disruptive, transformative, and efficiency enhancing.” Blockchain is the decentralized ledger that uses a consensus mechanism to finalize the correct balances of users of cryptocurrencies.

Cardano, co-founded by another Ethereum co-founder, Charles Hoskinson, is also helping African crypto adoption through digital identities and financial inclusion.

Cardano builder, Input Output Global, has partnered with the Ethiopian government to introduce digital decentralized student identities. It also co-funded a Kenyan startup Pezesha to enable responsible lending to micro, small, and medium size businesses.

Bitcoin Lightning Network Drives Crypto Adoption in Africa

Several other initiatives argue that Bitcoin’s utility as a bearer instrument can move money across Africa cheaper than traditional remittances.

Recently, the CEO of payments company Block Jack Dorsey and his lieutenants spoke at the Africa Bitcoin Conference in Accra, Ghana. They argued that Bitcoin offers an alternate financial system to countries whose currencies face devaluation and have complicated trade relations. Citizens in these countries are often unbanked, allowing Bitcoin to provide a financial lifeline to the neediest without an intermediary.

Legal status of crypto in Africa. Source International Monetary Fund
Legal status of crypto in Africa. Source International Monetary Fund

“It doesn’t matter to me if the price goes down or up because I can still use Bitcoin as a vehicle to move money around the world instantaneously,” argued Mike Brock of Block last month.

Bitcoin payments company Strike uses Bitcoin’s Lightning layer to move money between the U.S., Ghana, Kenya, and Nigeria. Lightning allows payments between nodes over a payment channel at a lower transaction cost than on the main Bitcoin network. Strike converts dollars to Bitcoin and sends it to an African partner for conversion to local money using Lightning.

Yellow Card, a company that received funding from Dorsey’s Block, allows customers to receive cryptocurrency in 16 African currencies for a network fee of between five cents and $1. 

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In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.

David Thomas
David Thomas, a seasoned electronic engineer with nine years of expertise, has built a distinguished career by combining his passion for writing with an in-depth understanding of...