For the global cryptocurrency industry, 2021 will be remembered as one of the years the bitcoin broke past its all-time price high and drove the sector even closer towards mainstream adoption. Cryptocurrency reported a 1,200% surge in adoption, the launch of Africa’s first central bank digital currency and the Central Bank of Nigeria’s circular on cryptocurrencies.
Marius Reitz, Luno’s General Manager for Africa, has identified three key trends to expect on the continent throughout the year. These include the following.
1. Rethinking regulation
Last year saw the continent’s major economies take a much more proactive stance on consumer protection, most notably the introduction of blanket bans. For countries that adopted these measures, the results have not been ideal with trading activity being pushed underground and regulators left with a reduced level of visibility of the sector.
With this in mind, Luno expects an openness amongst regulators to work alongside industry players to establish a more robust and effective framework. This could encourage other African countries to follow suit.
2. Kenya’s emergence
With Nigeria’s crypto ban dominating headlines throughout 2021, one significant development in Africa was Kenya’s ranking as the world’s leader in P2P trading volumes for the second consecutive year. The country’s crypto industry is booming with a rapidly emerging crop of companies building blockchain-based solutions and considering its young population, high levels of mobile connectivity and familiarity with digital payment solutions like mobile money, it’s firmly positioned to emerge as East Africa’s leading crypto hub in 2022.
3. A new solution to Africa’s remittances problem
According to the World Bank, total remittances in Sub-Saharan Africa alone broke past Ksh. 5 trillion (USD 45 billion) in 2021. However, with the severe lack of foreign currency reserves across Africa stopping companies from receiving international payments and remitting their profits, many businesses could look towards cryptocurrencies as an alternative means of handling transactions.
The key strength of cryptocurrencies in this area lies in the open and decentralized blockchain networks that support them. This is because they allow money to be easily transferred between parties without all the lag times and exorbitant fees wherever they are.