Since cryptocurrency was introduced in 2009, only a handful of countries have imposed regulations. As a result, many people use cryptocurrency for illegal purposes, while other people do not trust the currency. Others believe that crypto was developed for illegal transactions, and once regulations are implemented, crypto will collapse and lose its value. In Africa, no country has imposed regulations that govern it and how people use and invest in it.
The idea of regulating cryptocurrency in Western countries has been discussed, but governments have yet to see the benefits that might develop from the regulation. Since Africa is relatively new, regulating crypto might be the best way to ensure maximum crypto adoption and secure African culture and morality. Some of the benefits that African countries might get from imposing regulations on cryptocurrencies include the following:
Lead to Better Crypto Understanding
The first thing that governments will do before imposing regulations on crypto is to study it, its benefits and its risks. Doing this will help the government to have a better understanding of cryptocurrency. As a result of the investigation and the result, the government will educate more people on the benefits and the risks that cryptocurrency offers to investors.
A better understanding of cryptocurrency means better performance. The best application or advantage this offers is its effects on the government’s investments in platforms that empower more people to be involved in cryptocurrency. With the African governments spearheading the campaign, more people will be educated, considering governments are more effective and more people believe in the government than private organisations.
The government will learn the benefits cryptocurrency offers to the economy when regulating cryptocurrency. A good example is how Nigeria taxes profits obtained from cryptocurrency investments. As a result, the government will invest in internet connection to empower more people from various parts of the country to access and adopt cryptocurrency to maximise benefits to the citizens, the government and the overall African economy.
Improve the Value of Cryptocurrency
The best thing about regulating crypto in Africa is that governments will develop a list of crypto allowed in each country. These will be the cryptocurrencies with the most benefits for the country and the continent. Since the number of crypto in the world is already over two thousand and more developing every day, having a specific number of cryptocurrencies allowed in a country will positively impact the economy. This is the case because the government will have the ability to know the performance of the cryptocurrencies and allow the currencies with the best growth potential. The government will also consider the risks that develop with every cryptocurrency, reducing the risk of failure for investors. Limiting the number of crypto to only currencies with the best value and potential for growth will improve the value of the crypto and the local economy.
Prevent Market Manipulation
In the money market, the value of each cryptocurrency and other currencies is very volatile. This means that the value changes almost daily. Some people take advantage of this and trade cryptocurrencies for a living. They buy cryptocurrencies at a lower price and sell when the value increases. There is nothing wrong with doing this, but some organisations might intentionally plan to manipulate either the rise or fall of the value of cryptocurrency. This may help people manipulate the currency’s price to benefit from profits while others suffer from the loss of value.
This was seen when Bitcoin lost its value from 60,000 dollars to $40,000. When the government regulates cryptocurrency, this will not be possible. People and organisations will not be able to intentionally make the value of cryptocurrencies lose or gain value to profit from the change in value. This will help secure citizens’ investments and ensure people make money correctly. Doing this will also ensure everybody is protected and their investment is secure, regardless of cryptocurrency investment.
Improve Cyber Security
Cyber security is a problem that might cause a lot of challenges for investors in cryptocurrency. Cyber crimes happen when people remotely hack other people’s computers and online accounts and commit crimes with the computers or accounts or steal from their accounts. Since crypto is done online, hackers might decide to steal from investors who have spent their savings investing in it.
The government can easily deal with this problem by developing a platform or a way for investors to secure their investments from hackers. The government could easily fund a project to have a platform that cannot be hacked; it trains people on how to secure their investments.
Reduce Online Fraud
Another illegal activity that was introduced through cryptocurrency is online fraud. Many people have been victims of online fraud in one way or the other. One of the most common actions is where people prepay for goods or services through cryptocurrency, but the person meant to offer the goods and services does not honour the agreement. Governments may have regulations that control such a situation, and victims can have a way to recover their money.
Reduce Money Laundering
One of the main reasons many people and governments are against cryptocurrency is the money laundering potential the currency offers. Many criminals have done this and found a way to protect their money from the government. Regulations could solve this problem and ensure crypto users are not using it for illegal actions.
One of the regulations that might be implemented is to track investors’ identities and verify transactions. This will make sure that cryptocurrency use in Africa is safe and secure. Doing this will also ensure the crime rate in Africa reduces due to the easy tracing procedure.