Ghana’s Central Bank is making a bold move to regulate digital assets, including popular cryptocurrencies like Bitcoin and Tether. A few weeks ago, the apex bank proposed new guidelines, this was after a three-year internal review revealing a growing appetite for crypto in the country. The draft guidelines aim to mitigate risks such as money laundering, terrorism financing, and fraud, while also enhancing consumer protection.
One crucial aspect of Ghana’s strategy is its focus on cryptocurrency exchanges or Virtual Asset Service Providers (VASPs). The proposed regulations would require these exchanges to monitor and report suspicious transactions, adhering to the FATF’s Travel Rule, which mandates the sharing of information about the originators and beneficiaries of cryptocurrency transactions. Also, the Bank of Ghana plans to work closely with the Securities and Exchange Commission (SEC) to develop complementary regulatory frameworks, aiming to cover the diverse applications of digital assets. However, Ghana’s success in regulating digital assets will depend on its ability to implement these regulations effectively.
The past three years Ghana has experienced a surge of interest in cryptocurrencies. According to data from Africa Money and Defi Summit West Africa, there was a 70% increase in crypto transactions from 2021 to 2023. There were over 1.3 million Ghanaians engaging in crypto-related activities in 2023 alone. This means more Ghanaians turn to digital currencies for investment, remittances, and day-to-day transactions. Without clear guidelines and oversight, the market could become vulnerable to scams, fraud, and money laundering.
Ghana’s move to regulate digital assets isn’t happening in isolation. Other African countries have tried similar approaches with mixed results. For example, Nigeria’s 2021 ban on banks facilitating crypto transactions resulted in a 2021 ban on bank-facilitated crypto transactions resulted in a 27% increase in peer-to-peer trading. Similarly, South Africa introduced a framework for cryptocurrency service providers, but enforcement has been inconsistent, and Kenya’s warnings about crypto risks have failed to curb unregulated growth. If Ghana merely replicates the strategies of other nations without addressing the unique local context, the regulations may face significant challenges. Moreover, public trust in these regulatory frameworks is vital as without it, the rules may fail to gain traction.
As the Bank of Ghana seeks feedback from the public and industry stakeholders on these draft guidelines, the coming months will be crucial in shaping the future of digital asset regulation in the country. The outcome could set a precedent for other African nations grappling with similar issues. The revenue in the Cryptocurrencies market for Africa is projected to reach US$3.1bn in 2024. However, for these regulations to work, Ghana will need to balance strict oversight with the flexibility required to accommodate the rapidly evolving digital asset market.
