The Economic Community West African States (ECOWAS) is at odds over the legality and operation of crypto in its member states. What will be the fate of cryptocurrencies in the region?
ECOWAS wants to regulate crypto
ECOWAS, a region of nearly half a million people, is a leader in crypto operations across Africa. However, the regional body is currently discussing crypto in its parliament. It is looking at what the challenges and opportunities are in the crypto industry with representatives from the 15 member states and potentially drafting a crypto regulatory framework for member countries.
The regional economic bloc is particularly surprised by how popular crypto is becoming in its jurisdiction, despite Bitcoin losing more than half its value recently due to market volatility. However, it is unclear if ECOWAS will ever reach consensus due to the divided opinions on crypto.
Nigeria tried to ban crypto but failed
Earlier this year, the Central Bank of Nigeria (CBN) ordered banks to block accounts linked to cryptocurrency transactions. However, crypto businesses in Nigeria boomed instead. The research found that crypto inflows into Nigeria stood at $2.4 billion in 2021, indicating steady progress amid a government ban.
Things have just become normal for the Nigerian crypto ecosystem. Nigeria remains Africa’s leading crypto nation by trade volume. In 2020, Nigeria was the third leader of the world’s crypto trade only after the US and Russia with transactions reaching $400 million.
Why the ECOWAS region will remain Africa’s crypto stronghold
According to a report by CoinIdol, a global blockchain news outlet, a crypto city called “Akon City” is forming in Senegal. The city, which its founder Akon calls “real-life Wakanda,” is in the making, with legal tender to be Akoin, Akon’s favorite cryptocurrency. The country is a supporter of its compatriot’s crypto mission and offered Akon at least 2,000 acres of land to build the crypto city.
When the CBN tried to ban crypto in February, it failed so much that it relaxed any pressure on crypto a few months later after realizing that the ban was instead boosting crypto’s popularity. The bank issued a clarification statement to clear the air, saying that crypto activities were no longer banned.
ECOWAS does not make decisions for individual countries. Although this regional economic integration plays a significant role in shaping the economic activities of its members by initiating a unified customs union policy, liberalizing immigration policies and influencing the inflow of foreign direct investment, it is a bit difficult for the body to come up with fiscal policies that meet the development needs of individual member states. These are entirely at the discretion of the member countries.
Just like the African Union, the continental body that unites the whole of Africa has not been able to create a single currency within the continental free trade area to date due to political, social and economic differences. With the tightening of Covid-19, nations have tended to look inward, paying little attention to the affairs of other countries.
Crypto is here to stay
Cryptocurrencies are growing at an unprecedented rate – that is undeniable. The total crypto market capitalization has reached a record $6.67 trillion. More billionaires are flocking to crypto than ever before. Elon Musk , JP Morgan and others are crypto billionaires. The co-founder of Apple, Steve Wozniak, just said bitcoin is better than gold. From just one cryptocurrency in 2009, there are more than 4,000 of them today, crypto is growing! Countries around the world have realized the potential of cryptocurrencies and are developing their own, called central bank digital currencies (CBDCs). In fact, Nigeria, a key ECOWAS member country, could launch its CBDC by the end of the year, while China has also completed the pilot for its digital yuan project and is ready to roll it out soon.
Although ECOWAS is concerned about the risks associated with cryptocurrencies, the establishment of a full regulatory framework is still far from ideal. The regional bloc is not only economically diverse, but also socially and politically diverse. There are both crypto advocates and skeptics, so it’s a house divided. Cryptocurrencies are unstoppable! Countries have no choice but to adopt them.
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