Crypto adoption in Africa
Globally, the cryptocurrency market has grown rapidly over the past few years as crypto adoption rises. Africa, with a predominantly young population, is considered the continent that has the fastest adoption rate.
Cryptocurrency has proven that people have the ability to be their ‘own bank’ and manage their own wealth, thus eliminating third parties. With high financial instability in various African countries, the introduction of the cryptocurrency market is gradually onboarding young people who are eager to build wealth.
As more and more people are jumping on the crypto wagon, its legal status globally has seen significant shifts, from countries legalising Bitcoin and other cryptocurrencies, to others banning them. Some countries have also started to explore the use of central bank digital currencies (CBDCs) as a way to promote financial inclusion and support a cash-lite economy, while some have piloted their own CBDC.
Following the legalisation of Bitcoin by El Salvador in 2021, other countries have followed suit. One of those is the Central African Republic, which became the first country in Africa to take the lead in legalising cryptocurrency. Nigeria is the first country in Africa to have introduced and implemented its own CBDC, the eNaira. Since then, many countries have examined their economies and put in place measures and policies that support their economies, and Ghana is no exception.
Overview of the cryptocurrency market in Ghana
There is no cryptocurrency legislation or regulation in Ghana. However, Ghana’s central bank – the Bank of Ghana (BoG) – has issued several notices to the general public stating that cryptocurrencies are not recognised as legal tender and that people who trade in these currencies do so at their own risk. In the most recent notice (NOTICE NO BG/GOV/SEC/2022/03), the BoG reiterated that cryptocurrencies such as Bitcoin are not regulated under any laws in Ghana, and are therefore not backed by any guarantees or safeguards.
The Securities and Exchange Commission (SEC) has also warned against the use of cryptocurrencies in Ghana, in a notice (SEC/PN/003/03/2019) in March 2019. In that communiqué, the SEC was emphatic as regards the non-recognition of cryptocurrency as currency or legal tender in Ghana, and asserted that it does not regulate these types of product offerings and their accompanying online trading platforms or exchanges.
In terms of existing regulation of financial technology (‘FinTech’), however, the Payment Systems and Services Act, 2019 (Act 987) was introduced in 2019 to amend and consolidate the laws relating to payment systems and payment services, and to regulate institutions that carry on payment service and electronic money business. This legislation has since been the framework governing FinTech companies and their activities in Ghana.
In a related development, the BoG established a FinTech and Innovation Office to drive the bank’s cash-lite, e-payments, and digitalisation agenda. The office also develops policies to promote innovation in the banking sector and FinTech interoperability. The office has launched a regulatory and innovation sandbox pilot under which one of the categories it would give preference to is products and services leveraging blockchain technology. This is in line with its commitment to evolve an enabling and inclusive regulatory environment that promotes FinTechs and supports innovation.
In a move that many consider as proffering an alternative to cryptocurrencies, the BoG announced the introduction of its CBDC – the eCedi – which is now in its pilot stage.
Economic outlook in Ghana
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