Digital currency regulation in Africa: Learning from Nigeria’s Crypto Securities Act
Over the past five years, cryptocurrency has evolved from a speculative fringe into a $3.32 trillion pillar of global finance—over tenfold its early-2021 valuation.
This surge reflects widespread retail adoption, institutional products like BlackRock’s $50 billion iShares Bitcoin Trust, and DeFi’s expansion from $5 billion in 2020 to $190 billion by late 2024. Even amid venture-capital headwinds, blockchain startups raised $11.5 billion across 2,150 deals in 2024.
Central banks have accelerated digital-currency initiatives, with 94 per cent exploring CBDCs and pilots, such as, mBridge, Norway’s e-krona, the Bahamas’ Sand Dollar, and Nigeria’s eNaira.
Yet, Sub-Saharan Africa accounted for only 2.7 per cent of global on-chain volume ($125 billion) between July 2023 and June 2024, despite Nigeria alone ranking second worldwide at $59 billion. Only 25 per cent of African countries have formal crypto-asset laws, and many ban crypto.
This regulatory vacuum fosters uncertainty, deters institutional participation, and risks sidelining African innovators as the global crypto revolution accelerates.
Urgency
Emerging markets demonstrate the payoff of proactive crypto strategies. Latin America’s Brazil, Argentina, and Mexico rank among the top 20 adopters, using cryptocurrency to hedge inflation and streamline remittances, while Southeast Asian hubs like Vietnam, the Philippines, and Thailand weave crypto into commerce and DeFi experimentation.
Eastern Europe’s Ukraine and Russia leverage on-chain channels for cross-border transfers. These precedents show that, with clear laws and infrastructure, countries can leapfrog traditional financial barriers.
Africa’s youthful demographics—median age 19.7 years, with nearly 60 per cent under 25 by 2030—coupled with youth unemployment exceeding 30 per cent, make crypto and DeFi platforms ideal for alternative financing, gig-economy remittances, and digital entrepreneurship. Delay risks capital flight, brain drain, and widening inequality.
Despite crypto’s promise, most African governments lack dedicated frameworks. An IMF survey finds only 25 per cent of Sub-Saharan states regulate crypto, two-thirds impose restrictions, and several ban it outright.
Ghana, Kenya, the DR Congo, and Algeria remain in legislative limbo, depriving entrepreneurs and investors of legal clarity. Accordingly, African crypto ventures raised just $1.12 billion in 2024, compared to Latin America’s $2.7 billion in 2022.
Informal and peer-to-peer markets flourish unchecked, fueling fraud, money laundering, and consumer harm. In this vacuum, global exchanges—led by Binance’s 52–72 per cent share of African trading volumes—dominate, siphoning fee revenue offshore and stifling local innovation. Without licensing, local-entity requirements, and market-integrity standards,
Africa cedes digital-finance control to foreign incumbents.
Economic promise
Regulated crypto markets can transform Africa’s economies. DeFi protocols could bridge the $331 billion SME financing gap by enabling on-chain credit scoring and collateral-efficient lending.
Agricultural tokenisation—blockchain-verified warehouse receipts and crop derivatives—can channel global liquidity into smallholder farms, cut payment cycles, and reduce counterparty risk.
Diaspora remittances, worth $54 billion in 2023, incur average fees of 7.9 per cent; licensed stablecoin corridors could lower costs below 2 per cent and settle in minutes.
Under the AfCFTA, tokenised letters of credit and digital documentation can shrink intra-African trade settlement from weeks to hours, unlocking up to $450 billion in GDP by 2035.
Even climate finance benefits: tokenised carbon credits ensure transparent, verifiable decarbonization, attracting public and private capital to reforestation and clean energy projects.
Youth-driven innovation
Africa’s youth-led fintech successes underscore the impact of supportive regulation. Nigeria’s Yellow Card operates in 20 countries, processing over $3 billion by late 2024.
Chipper Cash grew from 2 million to 5 million users in a year, generating over $100 million through peer-to-peer payments. South Africa’s VALR serves 600,000 retail and 1,000 institutional clients across spot, margin, futures, and staking products.
Micro-startups like Fonbnk bridge prepaid airtime to stablecoins with nine employees, exemplifying lean innovation. Regulatory clarity attracts investment, scales operations, and spawns jobs in legal, cybersecurity, and support services.
African crypto vision
Realising these opportunities demands a unified, multi-stakeholder approach. Policymakers should adopt harmonised licensing under the AfCFTA Digital Trade Protocol, embedding “same activity, same risk, same regulation” across ECOWAS, EAC, and SADC.
A Pan-African “crypto rail,” built on the Pan-African Payment and Settlement System, would enable regulated stablecoins and tokenised securities to clear continent-wide within minutes.
Education and skills development must expand via blockchain curricula at universities, certifications by the Africa Blockchain Institute, and scholarships for technical colleges and online learners.
“Crypto councils” of regulators, industry, academia, and civil society can co-create policy, oversee sandboxes, and safeguard market integrity, while African Development Bank–backed innovation hubs co-design solutions aligned with Agenda 2063’s vision of a digitally empowered Africa.
Barriers, roadmap
Governments must require clear disclosure—volatility dashboards, risk warnings, and historical performance data—and impose liability on platforms that fail to report or address fraud.
Digital-ID integration, leveraging foundational ID systems in 22 countries, is essential for robust KYC/AML and transaction monitoring. Infrastructure deficits demand solar-hybrid mini-grids, satellite internet, and smartphone subsidies.
Adaptive regulation via fintech sandboxes—already active in at least 15 African markets—will allow safe product testing with transparent exit criteria for full licensing.
Immediate steps include issuing provisional crypto guidelines, embedding e-KYC in licensing regimes, and convening multi-stakeholder fintech councils for ongoing policy refinement.
Continental institutions should extend the Digital Trade Protocol to digital-asset flows, finance blockchain backbone projects, and mobilise ethical crypto venture capital through tax incentives and co-investment vehicles.
The writers are Maritime & Port Expert/AI Consultant/Senior Research Fellow CIMAG/CEO Knowledge Web Centre and a Professor of Naturopathy/Barrister & Solicitor (The Gambia Bar)/Chartered health economics/ President, Nyarkotey College of Holistic Medicine & Technology.
E-mails: kingdavboison@gmail.com & professor40naturopathy@gmail.com
