Introduction 

Cryptocurrency is a virtual currency that works as a medium of exchange via a computer network called a blockchain. Cryptocurrency is distributed in the blockchain and carries functions without relying on central government authority. The most well-known Cryptocurrency is Bitcoin, which is the most used across Africa. There is a rapid increase in crypto trade, especially in sub-Saharan Africa, which confirms Africa has the fastest-growing cryptocurrency market among developing countries. Africa has also been hailed as the third-fastest growing market globally. Africa has realised a 1200% increase in cryptocurrency payments between 2020 and 2021. This trend is projected to grow. Kenya, South Africa, and Nigeria have been ranked among the top 10 countries globally in terms of the use of Cryptocurrency. Despite these positive reviews, the continent fails to capitalise on the phenomenon of Cryptocurrency fully and drives the continent’s potential economy.

Cryptocurrency and Africa’s economy

Cryptocurrency can drive Africa’s economy in terms of remittances. Countries like Zimbabwe and Nigeria boast large numbers of citizens resident in Europe and the USA. Every month they send money back home as remittances. You can utilise cryptocurrencies to facilitate remittances because crypto transfers circumvent traditional banking services. This allows for cheaper and faster international money transfers. Research has proven that cryptocurrency transfers related to remittance payments have increased in volume and value since the inception of the COVID-19 pandemic. Cryptocurrencies can also alleviate Africa’s economic challenges by reducing financing gaps for micro-, small, and medium-sized (MSM) enterprises.

Regulatory framework for Cryptocurrency

However, cryptocurrencies pose certain associated risks, especially at the cost of the consumer. Cryptocurrency is volatile, intangible and exists on a non-regulated “stock market”. Again, Cryptocurrency is hardly regulated by any authority, which increases the chances of criminal activities. Due to this non-regulation, there are chances of money laundering, Ponzi schemes and the use of cryptocurrencies to purchase things on the Dark Web. However, these risks can be averted if regulatory policies are put in place. Africa is failing to take advantage of cryptocurrencies because of a lack of regulation. Lack of cryptocurrency education is another factor. The impediment to adopting cryptocurrencies like  Bitcoin is the strict regulations banning the use of cryptocurrencies. For example, Egypt, Zimbabwe, Tunisia Algeria have all made a blanket ban on cryptocurrencies. The author believes that a total ban is not the answer. Instead, African countries should implement a sound regulatory framework to avert the associated risks. South Africa is leading in this aspect as it continues reviewing its laws and bringing Cryptocurrency within its already existing legal framework.

Conclusion

Cryptocurrency has the potential to increase Africa’s economy. Most countries have already embraced it. However, African countries need to develop a sound regulatory framework for its usage.