The arrival of crypto-assets in Africa was seen as the end of financial exclusion in a continent that has remained in the dark ages for so long. With cryptocurrencies making it possible for retail investors to dictate how they spend their money and what they get in return, the continent quickly embraced the industry.
However, the governments’ stringent regulatory oversights have seen the sector beginning to suffer from private crypto ownership outrightly banned in some African nations.
South African Crypto Firms Seeking Greener Pastures
South African crypto firms threaten to leave the country due to the toxic regulatory environment. The country, which has seen a lot of bad actors taking advantage of ignorant investors in the space, is slowly stunting the growth of crypto, according to the crypto-facing companies.
In a chat with foremost financial media house Bloomberg, Sean Sanders, CEO of South Africa’s crypto trading platform Revix, said he is seriously considering leaving the African nation for the United Kingdom. He also said he would be setting up a second office in Germany, another crypto-friendly European nation.
Sanders said the reason why he is hard-pressed to leave is that the South African government has been slow in providing regulatory goalposts to guide industry practitioners in the running of the business within the country. According to him, an unregulated crypto environment will only see customers hesitate to put their money into cryptocurrencies.
Commercial banks have also been earmarked as a potential challenge for the crypto hotbed. While some are in support of offering crypto services for customers, some of them have barred crypto investors from making use of their platform. According to Marius Reitz, the African general manager of multinational crypto exchange Luno, the continued impasse may hurt the growth and adoption of digital assets in the continent.
Even though Asian nations like Singapore have been redrafting legislation to lure crypto-facing businesses into the country, there are still many financial regulators that are dining with the nascent technology with a long spoon. The United States has been one of the most prominent crypto critics, even as retail investors are surging daily into the burgeoning space.
FSCA Wants To Protect Consumers
With criminals seizing on the apparent ignorance most investors have about the sector, there has been a rise in crypto-related crimes. Ponzi schemes and scams have grown in the past year, with $2.1 billion reportedly lost in 2019 alone.
The South African regulatory body Financial Sector Conduct Authority (FSCA) says it has not been idle. According to Brandon Topham, head of enforcement at FSCA, the government wants to provide better protection for retail crypto owners rather than the businesses that offer crypto services. Topham assured that regulatory proposals are currently in the works and will be available soon.
South Africa is still recovering from the Mirror Trading International scam, which saw crooks pocket a whopping 23,000 BTC (worth $1.2 billion in today’s market). The company was placed under provisional liquidation after its CEO fled to Brazil to avoid answering for his crimes.
Besides South Africa, Nigeria, the most populous nation in Africa, finds itself in regulatory limbo. Nigeria’s apex bank issued a circular banning banks in the country from providing services to crypto businesses. Even though the government has announced that it is working towards regulating the sector, crypto use is still not allowed in the economy.