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Golix Plans to Launch ICO but Zimbabwean Regulator Rings Alarm Bells

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Golix ICO

The Securities Exchange Commission of Zimbabwe (SecZim) has warned investors against investing money in unregulated exchanges and securities following plans by Golix to issue a multi-million dollar initial coin offering (ICO). According to sources, the Harare-based cryptocurrency exchange is seeking to raise a minimum of $10 million. The company would be the first bitcoin startup in Zimbabwe to use this innovative way to raise funds.

The ICO Boom

An initial coin offering (ICO) is a revolutionary way to raise the capital needed for new cryptocurrency projects by issuing a percentage of the initial coins supply among early-stage investors. Similar to investing in a company’s stock, the value of the new coin linked to the digital currency project has the potential to gain in value as the project performs well. Once successfully launched, the new coins or tokens can be traded on cryptocurrency exchanges.

Globally, ICOs have appealed to blockchain companies as the next big thing in corporate fundraising and speculative investing. In 2017 alone, over $4 billion dollars were raised through this new form of fundraising.

However, ICOs have faced hurdles in the form of financial regulators, central banks, and governments which are concerned about the disruptive nature of cryptocurrency technologies and their potential for illegal uses. Last year, both China and South Korea banned ICOs.

ICO to Fund Regional Expansion Amidst Regulatory Pressure

Golix, which traded over $1 million worth of bitcoin last month, is looking to launch its ICO by the end of March, or latest in the second quarter, according to sources. The company which recently enabled Ether and Bitcoin Gold trading on its digital currency exchange intends to raise money to fund its entry into other African markets.

However, Securities Exchange Commission of Zimbabwe (SecZim) CEO, Tafadzwa Chinamo cautioned the public against dealing with unregulated exchanges and securities as there is no legal recourse in case of mishaps.

“Investing in cryptocurrencies in Zimbabwe is a personal decision. The SecZim advises against investing in securities that are not regulated for a few obvious reasons. Investment in cryptos in Zimbabwe is not protected by any law in any way,” Chinamo stated.

According to Chinamo, unlike IPOs which are governed by strict rules that foster transparency and disclosure and ensure investors are not misled by fraudulent persons who float worthless securities, ICOs usually operate in a legal grey area, though this is largely in part due to the lack of cryptocurrency regulation in Zimbabwe.

Locally, companies launched IPOs are required to submit registration statements, financial statements dating back five years, and are also required to undergo valuation by independent financial advisors to determine the fairness of the quoted IPO share price. These disclosures are subject to review for compliance by the market regulator.

ICOs, on the other hand, operate on the fringes with little or no regulatory oversight. Usually, startups launching ICOs will release a technical whitepaper explaining their project and will market their token sale in the hope that prospective investors will buy into the project.

Having said that, many Zimbabweans may choose to ignore the warnings as the cryptocurrency mania takes root in the country. A few months ago the high demand for bitcoin on the local exchange drove the price to almost double of where it was trading at on international exchanges. The demand was buoyed by a debilitating liquidity crunch and acute cash shortage in the country that has affected individuals and businesses who want to engage in commerce and international trade. Hence, cryptocurrencies like bitcoin remain popular among Zimbabweans as an alternative currency and as an investment, which could, in turn, help Golix’s ICO funding ambitions.

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Nigeria Wants Regulatory Framework for Cryptocurrencies

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Nigeria Regulatory Framework Cryptocurrencies

With cryptocurrency adoption soaring in Nigeria, it is no surprise that on April 25, 2018, members of the House of Representatives, urged the Central Bank of Nigeria (CBN) and the Nigerian Deposit Insurance Commission (NDIC) to create a legal framework for the regulation of blockchain technology.

The resolve was passed following the adoption of a continuous motion titled ‘Need to regulate blockchain applications and Internet technology’, which was supported by Solomon Adaelu, who emphasised the innovation that the blockchain brings such as the potential to accelerate payments in the country’s financial services industry.

Adaelu said: “Blockchain as a digital and decentralisation ledger technology that records all transactions without the need for financial intermediary bank is new to humanity and can be a core payment facilitator for financial services industry. A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography as an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.”

The blockchain was invented in 2008 for the cryptocurrency bitcoin. Since its establishment, it has helped solve the issue of double spending on digital currency transaction without the need for a central server or trusted authority.

Adaelu went on to state that the deadline for a unified cryptocurrency regulation had been set for July 2018 following the G20 Finance Ministers’ meeting in March.

He further added: “Countries such as the USA, the UK, Russia, Venezuela, and Kenya have [already] provided [a] framework for the regulations of this emerging technology,” and believes that Nigeria should be next in line to do so.

Other lawmakers supported the motion while acknowledging the warning given by the NDIC to be careful when trading cryptocurrencies, given the complexity and uncertainty surrounding them.

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Binance Partners with Blockchain Innovation Hub in Uganda to Promote Economic Development

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Binance in Uganda
Image by Binance

Binance, a global cryptocurrency exchange, has partnered with Crypto Savannah, Made in Africa initiative, and Msingi East Africa to promote economic development and youth employment in Uganda using blockchain technology. The partnership aims to achieve these goals by “creating thousands of jobs and bringing investments to Uganda.”

Made in Africa initiative and Msingi East Africa are organisations that are dedicated to the economic transformation of African countries while Crypto Savannah is a newly created African blockchain innovation hub.

According to Trading Economics’ data, the employment rate in Uganda stood at 47.80 percent in 2012 compared to 88.30 percent in 2009. The broad use cases for blockchain technology have the potential to change these statistics for the better by providing innovation opportunities for young people.

Changpeng Zhao, CEO and founder of Binance, announced these plans on Twitter and hinted at the possibility of Binance getting more involved in African projects.

Binance’s initiative is believed to have peaked at a recent meeting with the Blockchain Association of Uganda (BAU) where Zhao interacted with the local blockchain community and promised to support and train young entrepreneurs leveraging the blockchain. He also advised young entrepreneurs to offer solutions that are going to improve the lives of the society.

“Binance is tailor-making partnerships according to the environment. We want to understand the landscape and grow our understanding of the market.”

Zhao’s meeting with BAU will be followed by the Africa Blockchain Conference 2018 which will be held in Kampala in May.

Blockchain Technology is Gaining Momentum in Africa

The Binance initiative is just one of the several upcoming blockchain-based projects that are taking place in Africa. For instance, the World Food Program recently announced a partnership with Devery to make food delivery to Tunisian school children safe. Furthermore, the World Blockchain Summit held in Nairobi last month has helped to open doors for global blockchain companies to establish themselves in Africa.

In view of the Binance initiative, Africa could attract more global blockchain companies in the future as the technology continues to take root on the continent.

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BitMari Conducts First Test Remittance on the Bitcoin Lightning Network

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BitMari Bitcoin Lightening Network

Zimbabwean startup BitMari has managed to successfully conduct its first Bitcoin Lightning Network test transaction with Tanjalo, a bitcoin startup from Lagos, Nigeria. The transaction signals a shift for remittances in Africa as users can soon expect almost instant low-cost bitcoin remittances.

Fast Transactions, Low Fees

BitMari is a Zimbabwe-based bitcoin company that leverages blockchain technology to expand into new remittance markets for the African diaspora. The startup was founded in 2015 by Sinclair Skinner and Christopher Mapondera to address the challenges faced by Zimbabweans when sending money overseas and vice-versa. In 2017, the company made history by becoming the first bitcoin enterprise to receive a money transfer license from the Reserve Bank of Zimbabwe. The company also formed a strategic partnership with Agribank to handle remittances for their customers using bitcoin.

Tim Akinbo, the co-founder and CTO of Tanjalo, was able to transfer $15 from Nigeria to a recipient in Zimbabwe through the BitMari platform using bitcoin. He believes the almost instantaneous money transfer will be instrumental in transferring value and promote cohesion by bridging local communities. The company is excited about the new development especially after successfully setting up the Lightning nodes.

Skinner, who is an ardent supporter of the adoption of bitcoin and blockchain technology in Africa to solve everyday challenges, stated:

“BitMari’s quick adoption of Lightning is active use of Bitcoin and Blockchain technology to solve real World challenges facing Africans on the continent and in the diaspora; such as costly remittance fees.”

The Bitcoin Lightning Network

The Bitcoin Lightning Network (LN) is a system built on top of bitcoin that enables people to send and receive payments instantly, and lower transaction costs by bypassing the blockchain. The Lightning Network’s use of payment channels lets users transact with each other directly without having to broadcast their business to the entire network. Currently, the Lightning Network is growing after being launched a short while ago on main-net by the Lightning Labs team.

BitHub Africa, a Nairobi-based blockchain accelerator of which BitMari is a member, has published a guide on how someone can go about setting up a Bitcoin Lightning Node on a cheap computing device called Raspberry Pi. The device can be used to process transactions by anyone with the resources and skills to host the node.

For now, BitMari is searching for other Lightning nodes to connect to their own. The company is also focusing on improving its user experience to increase adoption of its services and pass on the benefits of fast and affordable remittances to its customers.

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