1-5. Cryptocurrency Regulations in African Countries

African countries are no strangers to the use of digital solutions for money transfers, nor to the rapid implementation of such technologies. It is often said that the pervasiveness of mobile telecommunication usage in Africa, enabled the continent to leapfrog many first-world countries. Mobile phone usage grew from less than 3% to 80% in under a decade. There is already an abundance of local mobile and e-payment platforms that have seized this as an opportunity to develop innovative ways to reduce the friction associated with transferring money across the continent.

An example is Kenya’s M-Pesa, which has been around since 2007. The platform, which allows customers to send and receive money via mobile phone, already handles transfers of more than 25% of Kenya’s GNP, leading to greater consumer confidence in financial technologies. Sub-Saharan Africa is also reported to have the second highest population of unbanked adults in the world, at about 350 million people, or 17% of the global total. Reportedly, two thirds of Sub-Saharan Africans do not have a bank account. Despite this, a high percentage of migrant work, both within and between African countries, results in a disproportionate need for remittance mechanisms outside of traditional banks.

Foreign remittance remains a primary source of income for many African communities and households, with countries like Lesotho purportedly attributing almost a third of their GDP to remittances from abroad. These, amongst many other factors, create the ideal environment for new ways of moving value, and present many of the challenges that distributed ledger solutions aim to solve. This also presents the potential for greater socio-economic inclusiveness, such as through enhanced financial security. So to what extent has blockchain and cryptocurrency been embraced in Africa? The results are mixed. Whilst the private sector is blazing ahead in many countries, governments have been apprehensive and reserved, and in some instances unreceptive. Countries such as Zimbabwe and Namibia have reportedly begun with a hard stance, whilst Mauritius is a regional frontrunner. The regulatory sandbox created in Mauritius, for instance, demonstrates a progressive take on the general economic benefits that could follow a friendly, and even incentivized, approach to cryptocurrencies, This creates another dimension for the potential for African countries to develop regulations around blockchain and cryptocurrency, with an intention to incentivize foreign direct investment.

Please refer to the following for introducing the regulations related to cryptocurrencies of major countries in Africa, which will be closely related to our project in the future.


Kenya does not yet have a blockchain regulatory framework in place. However, Kenya’s National Land Commission has welcomed the use of the blockchain network in creating transparency of land ownership, as it will alleviate potential fraudulent sales of land, and confusion over title to land. • Land Layby Group allows individuals to securely purchase property in Kenya, by accurately mirroring the Government Land Registry systems on a blockchain network. Potential purchasers can now review the accurate ownership records of the Government Land Registry systems on a tamper proof digital form. Land Layby Group believes that by using blockchain to publish the land records online, the risk of multiple titles for the same piece of land will be eliminated. The Law Society of Kenya has reportedly filed a lawsuit in an attempt to stall the implementation of digitizing title deeds using blockchain technology on the basis that (1) the Kenyan legislature has not yet passed any laws which would support such an initiative, thus opening up the possibility that any progress could be reversed by a successive executive, and (2) thousands of land ownership cases currently before the courts could be hindered by a digital record purportedly proving ownership prior to the dispute being properly resolved by the judiciary.

Another initiative in the private sector is the launch of TMT Global Coin, a blockchain-powered logistics company that hopes to improve cargo logistics globally by using blockchain technology through smart contracts to improve the transparency and authenticity of records in imports and exports. • The National Transport and Safety Authority has announced its intention to roll out an electronic motor vehicle identification service in Kenya where all motor vehicles will have an electronic sticker placed on the windshields, detectable only via the use of specialized technology, thereby assisting in the recovery of stolen vehicles. The network will be run on a shared blockchain platform which will alert various government agencies of the theft, including inter alia, the Kenyan Revenue Authority and the Kenyan Police. • Kenya’s public health sector is also attempting to install a smart platform in all public hospitals creating a shared blockchain hub where patients’ information and medical history may be shared. This will also enable nurses in rural areas to treat patients based on a doctor’s advice obtained elsewhere.

In addition, the Kenyan government is seeking to link the National Registration of Persons Bureau database to the closed circuit television cameras manned by the Kenyan Police, thereby enabling face recognition via blockchain technology.

In contrast, the Central Bank of Kenya’s governor has purportedly rejected the use of virtual currencies in Kenya due to their unregulated nature. In addition, the Central Bank of Kenya has repeatedly stated that it does not support the use of cryptocurrency within Kenya. On 28 February 2018, the Kenyan government (through its ICT Cabinet Secretary) announced that it would appoint an 11-member task force to explore the use of distributed ledger technology and artificial intelligence. This comes after the President of Kenya announced his intentions for Kenya to explore the opportunities in the new technology found in the fourth industrial revolution. This is a decidedly more positive response from the Government of Kenya who had previously referred to bitcoin as “a pyramid scheme”.

In Lipisha Consortium Ltd and Bitpesa Ltd v Safaricom Petition [2015] eKLR (the Lipisha Judgment), the court ruled that Bitcoin represented monetary value and that Safaricom was justified in suspending the services of Lipisha Consortium Ltd and Bitpesa Ltd, after Bitpesa Ltd dealt in money remittance services using bitcoin without first receiving the approval of the Central Bank of Kenya. • The Lipisha Judgment therefore sets a precedent for potential future sanctions by the Central Bank of Kenya against companies dealing in cryptocurrency in Kenya without first seeking its approval. • In November 2017, three traders were charged with conspiracy to commit a felony in Nairobi in connection with the theft of 10.2 million Kenyan Shillings. Apparently, the traders had helped an unknown and untraceable individual purchase cryptocurrency using the alleged stolen money. This case brought the importance of strict AML and KYC procedures to the fore.

The Central Bank of Kenya has expressed negative sentiments regarding the use of virtual currencies and this may hamper regulatory developments. • The use of the blockchain network to clarify land title ownership may in fact result in an increasing number of disputes regarding the ownership of land. Due to the precedent set by the Lipisha Judgment, there may be future litigation regarding the use of cryptocurrencies without the Central Bank of Kenya’s approval.


In 2017, the Director of National Payment Systems of the Bank of Tanzania confirmed that cryptocurrencies are “not recognized in the country and whoever uses it will not get any assistance from (the Bank of Tanzania) should anything happen.”

In January 2018, the Bank of Tanzania further claimed that cryptocurrencies were a threat to East Africa’s plan to launch a single, common currency which would be used across borders between the East African countries. The director stated that the plan to launch a common East African currency was still underway despite the popularity of cryptocurrencies. In addition, the Assistant Manager of the Safe Custody Centre at the Bank of Tanzania commented that “[i]nvestors in cryptocurrencies should be aware that they run the risk of losing all their capital.”

Despite the Bank of Tanzania’s concerns, Tanzania reportedly has a large cryptocurrency mining 13 sector and is rated 120 out of the 219 countries that are actively involved in bitcoin mining. Tanzania’s electricity consumption in cryptocurrency mining is predicted to amount to more than the entire country’s non-cryptocurrency related electricity consumption per year, and this is expected to increase by about 30%. The Director confirmed that there is no legal framework in Tanzania to regulate cryptocurrencies through the Bank of Tanzania. As such, the Director stated that the Bank of Tanzania “is currently studying internet currencies with a view to finding a permanent regulatory solution.”

Further, the Director commented that the Bank of Tanzania is worried as “cryptocurrencies are not issued by traditional institutions such as central banks. This amplifies the risks of financial instability.” Formal legal action There has been no litigation or court action reported in Tanzania yet.

The Bank of Tanzania is currently attempting to study cryptocurrencies but has not, as yet, released any regulatory guidelines. Further, the insistence that cryptocurrency will threaten the launch of the common East African currency may lead regulators to issue stricter legislation in an effort to quash the potential use of virtual currencies.


The Bank of Ghana has announced that the trading and use of cryptocurrency in Ghana is not yet legal because it is not recognized as a legitimate form of currency. This is because all media of exchange in the country must be supported by the Bank of Ghana, which has not yet approved the use of cryptocurrencies.

The Governor of the Bank of Ghana stated that the necessary regulations to support the use of cryptocurrencies do not currently exist in Ghana. However, the Bank of Ghana has drafted a Payment Systems and Services Bill (Ghanaian Bill), which it believes will enable the regulation of cryptocurrency in Ghana in the future. After a preliminary review of the Ghanaian Bill, there seems to be no reference to cryptocurrency, blockchain or digital currency, however cryptocurrencies will apparently be regulated through companies registered with the government as “Electronic Money Issuers.” The Bank of Ghana has discouraged the use of cryptocurrency until the promulgation of the Ghanaian Bill.

In Ghana, more than 80% of landowners lack official title deeds with the Land Commission of Ghana and most land is held customarily through oral agreements. To resolve this, Ghanaian start-up Bitland is using blockchain technology to mirror official title deeds, thereby boosting the integrity of the land records held with the Land Commission of Ghana. Bitland believes that after their land is clearly registered on the blockchain, landowners may finally be able to apply for loans and mortgages with their banks.

Land Layby Group, a Nairobi based real estate company, allows individuals to securely purchase property in Ghana, by accurately mirroring the Government Land Registry systems on the blockchain network. Potential purchasers can now review the accurate ownership records of the Government Land Registry systems on a tamper proof digital form. Land Layby Group believes that by using blockchain to publish the land records online, the risk of multiple titles for the same piece of land will be eliminated. A similar business model has been launched by Ghanaian based start-up, BenBen. Formal legal action There has been no litigation or court action reported in Ghana yet 5 Risks highlighted and key observations The disapproval of the use of cryptocurrency by the Bank of Ghana and the lack of clear regulation by the Ghanaian Bill may create uncertainty and possible sanctions by the regulatory authorities in future.


In early 2017, the Central Bank of Nigeria warned financial institutions not to use, hold or trade virtual currencies pending “substantive regulation or decision by the (Central Bank of Nigeria) as they are not legal tender in Nigeria.” Further, the Central Bank of Nigeria stated that banks who trade in cryptocurrencies do so at their own risk. The Central Bank of Nigeria cited its skepticism of cryptocurrencies on the possible exploitation of Nigerian citizen by criminals and terrorists. • Despite these warnings, a bitcoin-related Ponzi scheme reportedly resulted in almost 2 million Nigerian residents losing a combined USD 50 million in early 2017. • Following this, the Nigerian Deposit Insurance Corporation (the NDIC) warned Nigerians that they would not be afforded consumer protection or insurance from the NDIC when trading in cryptocurrencies as virtual currencies have not been issued by the Central Bank of Nigeria. The NDIC stated further that “[n]o central bank will accept digital currency as a substitute for its national currency or part of its monetary system, when it is not able to control it.” • In late 2017, the Deputy Director of the Central Bank of Nigeria commented that the “Central bank cannot control or regulate bitcoin. [The] Central bank cannot control or regulate blockchain. Just the same way no one is going to control or regulate the internet. We don’t own it.” Despite this, the Deputy Director announced that the Central Bank of Nigeria has “taken measures to create four departments in the institution that are looking forward to harmonis[ing] the white paper on Crypto currency.” • In January 2018, the Governor of the Central Bank of Nigeria stated that “Cryptocurrency or bitcoin is like a gamble…We cannot, as a central bank, give support to situations where people risk their savings to ‘gamble’.” The Governor stated further that the Central Bank of Nigeria may, in future, “make some very concrete pronouncements as to the direction [of the regulation of cryptocurrency].” • Despite the above response by the Central Bank of Nigeria and the NDIC, Nigeria reportedly has the world’s third largest bitcoin holdings as a percentage of gross domestic product. In contrast, the Nigerian Senate has launched an investigation into “the viability of bitcoin as a form of investment.” Formal legal action There has been no litigation or court action reported in Nigeria yet. 10 Risks highlighted and key observations • A circular has been released by the Central Bank of Nigeria prohibiting the trading of cryptocurrencies by financial institutions in Nigeria. It would seem that a violation by the financial institutions of this circular would result in sanctions by the Central Bank of Nigeria. • The slow acceptance of cryptocurrencies by the regulators is notable considering that Nigeria is reportedly the third largest holder of bitcoin in the world.

(Quate; https://www.bakermckenzie.com/- /media/files/insight/publications/2019/02/report_blockchainandcryptocurrencyreg_fe b2019.pdf)

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