The Politics of Cryptocurrency Regulation in Africa

Abstract

the global trade in cryptocurrencies constitutes a multi-trillion-dollar digital industry. In the minds of many, however, this shadowy and uncontrolled flow of financial resources across international borders also represents a potential national security threat. Amid the lucrative benefits and security challenges of cryptocurrencies, governments in sub-Saharan Africa have taken dramatically different approaches toward regulation. However, these approaches have not always been intuitive or predictable. In Nigeria, where an estimated 35 percent of adults trade or store wealth in cryptocurrencies, the federal government has periodically sought to outlaw or curtail the burgeoning local trade of crypto assets. In contrast, the government of the Central African Republic (CAR), where 90 percent of the population lacks access to the internet, became the second country in the world to make a cryptocurrency legal tender. Both countries subsequently designed and implemented state-backed, virtual currencies. Why did these two African governments decide to regulate cryptocurrencies and, when they did, why did they take such dramatically different approaches? And how do these regulatory efforts relate to the two governments’ subsequent creation of their own state-backed virtual currencies?