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Ecobank Report: Most African Regulators Are Taking a “Wait and See” Approach to Cryptocurrency Regulation

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African Regulators

While there has been a substantial increase in the adoption of cryptocurrencies in Africa compared to three years ago, there has been minimal effort from African countries to try and regulate cryptocurrencies despite their increased use in various African nations according to a new report by Ecobank.

Ecobank tracked “the current state of cryptocurrency regulation in all markets in Sub-Saharan Africa” through the regulatory responses that have been issued by central banks or financial regulators. In the report, the pan-African bank found that most African regulators are taking a “wait and see” approach when it comes to cryptocurrency regulation.

The report stated: “Many African governments and regulators recognise both the risks and the potential positive impacts of cryptocurrencies, and some also appreciate the difference between cryptocurrencies and the underlying blockchain technology. But they have been reticent in authorising cryptocurrency transactions, and mostly remain apprehensive about the potential risks. African countries appear to be looking to their neighbours to regulate and innovate first, and learn from their mistakes, rather than being the first mover.”

The reported noted that the main reason why African governments were being skeptical about licensing the use of cryptocurrencies was their citizens getting overexposed to cryptocurrency investments and there being a future crash that would cause a ripple effect in the broader economy.

African Regulators’ Stance

African RegulatorsOut of the 39 jurisdictions surveyed, more than 21 countries in the region are yet to make a public declaration on the use of cryptocurrencies.

So far, there have been three countries that have taken a stance on cryptocurrency. Namibia tops the list having banned the commercial use of digital currencies. However, South Africa and Swaziland are the only two countries in Sub-Saharan Africa that have adopted “a generally favourable and permissive stance, but without full legality”.

The remaining countries fall somewhere in between and “refuse” to directly regulate cryptocurrencies claiming that bitcoin and other digital currencies “operate in the grey area between legality and illegality” and have issued warnings to their citizens and investors against using or investing in them. The bank also noted that conversations regarding the speculative nature and instability of cryptocurrency prices have overshadowed their benefits and the potential they bring.

The bank went ahead to note: “Unfortunately, the spectacular rise and fall in the traded value of cryptocurrencies has drowned out broader discussion on the potential benefits this new technology could bring. The transformational impact that could be delivered by tokenising products and services on the blockchain has been compared to that of the Internet. Crypto tokens and currencies could enable consumers to transact instantly, cross-border and for free, provide them with KYC-compliant digital IDs, and incentivise their behaviour and change the way they engage with governments & service providers.”

Ecobank will continue to track cryptocurrency regulation in Sub-Saharan Africa and provide regular updates that will reflect the regulation progress in the African nations.

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Online Retailer Newegg Now Accepts Bitcoin in Kenya, Nigeria, South Africa, Tanzania, and Uganda

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Bitcoin Accepted

Online retailer Newegg has expanded its bitcoin acceptance to 73 countries, including Kenya, Nigeria, South Africa, Tanzania, and Uganda.

Newegg and BitPay Partnership

NeweggNewegg has been collaborating with BitPay since 2014 to facilitate bitcoin payments in the US and Canada. “Since this initial implementation, not a single chargeback has been required for any bitcoin transaction on Newegg. The companies now build on this successful collaboration by extending the bitcoin payment option to the 73 new countries announced today,” an official statement said.

BitPay processes bitcoin transactions worth more than $1 billion yearly for its e-commerce partners. The bitcoin payments company uses blockchain technology to offer transparent transactions and to eliminate chargebacks. BitPay also “enables Newegg to increase its margin on each bitcoin transaction by avoiding credit card fees typically assessed on credit card purchases.”

Anthony Chow, Newegg’s president global sales, said: “Five years ago, we were one of the first major online shopping destinations to accept Bitcoin, and our early-adopter customers were quick to embrace this new payment option. Broadening the ability to pay with bitcoin to the majority of our global network underscores our commitment to bring innovation to the online shopping experience, and answers customers’ growing preference for our bitcoin payment option.”

Newegg sells products such as electronics, gaming equipment, and smart home appliances to over 38 million registered users in North America, Latin America, the Middle East, Europe, and the Asia Pacific.

Buying Products with Bitcoin

Buying items on Newegg with bitcoin is simple. Like with other online shopping processes, you add your items to a cart and select the shipping address of your choice. Once you do this, you proceed to choose bitcoin as the payment option of your choice, review your order, and then pay using BTC. Newegg allows users to pay using computer-based, web-based, or smartphone-based digital wallets.

While South African payments service PayFast recently dropped bitcoin, Newegg is extending this payment option to more people across the globe, highlighting the benefit of using a borderless, decentralised digital currency to shop online.

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How Popular is Bitcoin Gambling in South Africa?

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Bitcoin Gambling in South Africa

Ever since bitcoin launched in 2009, it has had a tremendous impact on many different industries, including online gambling. Having a reliable and secure payment method is imperative in order to have a worthwhile gambling experience, no matter which forms of betting you subscribe to.

When online gambling websites began accepting bitcoin, players all over the world had the ability to make quick and easy payments, while also maintaining privacy. In a sense, bitcoin (and the cryptocurrencies that followed) started a revolution in the online payment sphere and its impact has been felt all over the world.

One country that has significantly enjoyed the benefits of bitcoin is South Africa. South African gamblers are becoming ever more fond of cryptocurrencies and bitcoin ranks among the most-used.

Bitcoin’s Popularity in South Africa

Before we can explore the prominence of bitcoin gambling, we first have to take a look at how well cryptocurrencies are received in the country.

While bitcoin is popular all over the world, it is especially liked in developing countries. Nowhere is the previous statement more true than in South Africa. In a recent study, researchers found that bitcoin ownership in South Africa exceeds the world average by two times. It is estimated that 5.5 percent of the global population owns cryptocurrency, while in South Africa 10.7 percent hold a crypto balance. In the previous year, crypto transfers have increased by 25 percent in South Africa in a trend that seems to have swept over the entire continent.

This Calvin Ayre opinion shows that the transactions are used for both financial and recreational purposes, meaning that cryptocurrencies including bitcoin are becoming a part of everyday life. As one can imagine, recreation can also cover online gambling and there is a rising number of people using bitcoin to place bets on their favorite casino games or sporting events.

The Dark Side of Bitcoin Gambling in South Africa

bitcoin gambling in South AfricaCryptocurrencies are becoming increasingly more popular in South Africa. However, one thing that many overlook is that bitcoin and altcoins are not regulated by any government authority. Effectively, bitcoin is not recognised as a legitimate and official transaction solution. So how does this affect the online gambling scene?

Аnother article about bitcoin for gaming shows that crypto gambling in South Africa is illegal due to lack of regulations from the appropriate authorities. Any South African players engaging in bitcoin gambling is doing so at their own risk and no government institution can step in to assist them in case of fraud. That is not to say that all gambling operations accepting bitcoin from South Africans are fraudulent, but there are no fail-safes and no measures in place to protect users.

So far, the South African government has been slow in implementing some if any regulations to ensure the rights of online players and the safety of any crypto enthusiasts.

Of course, this does not even begin to tackle the problem of regulating bitcoin and cryptocurrencies in general. The added anonymity features and the lack of centralised supervision make crypto hard to regulate.

Moreover, identifying the owner of a wallet is downright impossible without cooperation from other parties. This does not account for the fact that crypto users are developing additional measures to protect their anonymity when using their currency of choice, e.g. hardware wallets or dispersing their funds across multiple wallets.

Future of Bitcoin Gambling in South Africa

It is clear that the South African gambling scene is ripe for further implementation of bitcoin and blockchain technology. However, slow actions on the government’s side will likely stall any potential progress and leave all bitcoin gambling operations in a legal gray area, at best.

Unless regulators take a more proactive approach, it is unlikely that any significant developments will be made in the near future, putting thousands of gamblers at risk.

Naturally, placing the safety of its citizens should be the South African government’s first priority and ensuring that no fraudulent operation remains active for long.

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South African Online Payments Processor PayFast Drops Bitcoin

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PayFast Drops Bitcoin

South African online payment gateway PayFast will cease supporting bitcoin payments from July 20, 2019, due to high transaction fees and long confirmation times. The company expressed its frustrations through an announcement on its website.

Bitcoin’s Current Limitations

PayFastAlthough digital currency is meant to make online transactions cheaper, faster, and convenient, PayFast observed that bitcoin’s current limitations have made it difficult for the company to offer it as an alternative to traditional payment methods.

“Unfortunately, there are a number of limitations and design flaws unique to Bitcoin that make it an impractical substitute for cash, including high transaction fees and long confirmation times for buyers. We have tried various ways to mitigate these problems, but unfortunately, these issues are fundamental. The resultant poor user experience has led us to re-evaluate Bitcoin as a payment method on our platform and a decision has been taken to discontinue support for Bitcoin from midnight 20 July 2019,” PayFast explained.

The PayFast platform has a ten-minute window for the confirmation of bitcoin payments. However, the Bitcoin network has failed, in most cases, to confirm payments within this time period resulting in unsuccessful transactions. The Bitcoin network can currently not handle the volume of transactions it gets at a faster speed, PayFast noted.

Luno has been enabling bitcoin payments on the PayFast platform by acting as an intermediary. “To eliminate any risk posed by bitcoin’s price volatility, Luno locked the bitcoin to ZAR exchange rate for a ten-minute window. If the transaction was not sufficiently confirmed within ten minutes, the payment was unsuccessful and a refund would be due,” PayFast said.

The Bitcoin network can only handle seven transactions per second compared to VISA’s 24,000. This limits bitcoin’s usefulness as a means of exchange and an asset. Moreover, users making payments using bitcoin risk incurring non-refundable processing fees when the transaction fails.

Despite these challenges, the Lightning Network promises to improve bitcoin transactions by making them instant, low-cost, scalable, and acceptable across different platforms.

PayFast Remains Open to Cryptocurrency

PayFast hopes that as this space continues to grow, cryptocurrencies will be able to handle faster payments.

“We are eagerly following the developments of cryptocurrencies and the supporting technologies that are aiming to enable faster payments. As soon as these become workable alternatives, we look forward to supporting cryptocurrencies as a payment method in the future,” the South African company stated. 

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