It’s an interesting week for the cryptocurrency space in Africa this week. The continent has seen more governments profess their support for cryptocurrencies publicly, while others are planning to create a regulatory framework for the market.
Nigeria opposition leader promises to support blockchain, cryptos
Atiku Abubakar, the former Nigerian vice president and current opposition presidential candidate, promised his supporters that, when elected, he would work to create blockchain and cryptocurrency regulation for the country.
According to local reports, Abubakar made the announcement while launching his policy document ahead of the February 2019 elections. In the policy, he explains that he plans to use blockchain and cryptocurrencies to help improve the country’s economy.
In his policy document titled ‘Get Nigeria Working Again,’ Abubakar also explain that this government will, in addition, create a regulatory framework for the industry. He stated that regulation would help build the industry, in turn, creating thousands of employment opportunities as well as generating income for the government.
He asserted, “My mission is to make sure that Nigeria’s economy is reactive to the challenges of the 21st-century knowledge economy by keeping up with the amazingly dynamic in the technological pace.”
The crypto ecosystem in Nigeria has been on the rise in the last few years and the country is among the top crypto markets in Africa. If Abubakar gets elected as president, the crypto space in the country stands to see tremendous growth. Despite the current crypto prices and challenges, it seems that Abubakar is optimistic about the cryptocurrency industry.
Uganda has plans for new crypto regulations
The cryptocurrency market in Uganda has shown great promise ever since Binance set up shop in the country. Though not as active as South Africa, Nigeria or Kenya, the market is quickly picking up the pace. With this new development, the government in Uganda has decided to set up regulations to govern all crypto operations. According to reports, the government seeks to establish rules that will protect its citizens from illegal activities in the space.
Thousands of Ugandans have fallen victim to one crypto scam or another and many have lost vast sums of money in the process, local news outlets reported. The government fears the economy in the country might become unstable if this trend continues.
According to David Bahati from the Planning and Finance Ministry, his ministry has finished drafting the bill that pertains to national payments. The bill will be presented before Parliament next month for debate and approval. The bill has already been approved by the Cabinet in Uganda and is believed to shine a light on what citizens can do when they find themselves victims to fraudulent activities in the crypto space.
South Africa seeks to regulate crypto through taxation.
In April 2018, the South African Reserve Bank stated that cryptocurrency is not considered “legal tender” in South Africa. Later, authorities in the country imposed tax regulations on crypto owners that require them to declare their gains and losses concerning their transactions involving cryptocurrency.
In July, the National Treasury published the draft Taxation Laws Amendment Bill (the Bill) for the public, the Treasury’s first attempt to regulate the use of cryptocurrency in the country. It proposes changes to both the Income Tax Act and the VAT Act. One of the proposed changes is the inclusion of cryptocurrency in the definition of “financial instrument” in the Income Tax Act.
Experts claim that the new bill will not be favourable for the crypto space in the country. According to the reports, Section 22 and section 22(1)(a) of the Income Tax Act limits the benefits crypto traders get from valuing their undisputed cryptocurrency using the valuation method contemplated in section 22. In addition, Section 11 also represses investment in FinTech companies in South Africa.
The Treasury has also suggested that the “issue, acquisition, collection, buying or selling or transfer of ownership of any cryptocurrency” be added to the definition of “financial services” in Section 2 of the VAT Act.
While some countries seem to be content with not innovating in the crypto space, it is becoming more apparent that African nations see the true value of digital currency in global economies.
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Quidax, a European-based cryptocurrency exchange, recently launched its operations in Nigeria. Among its new objectives is a plan to educate and increase the level of understanding on blockchains and its technologies in the country.
While speaking at the Abuja Blockchain and Artificial Intelligence Roundtable (ABAR), Buchi Okoro, chief executive officer of Quidax, urged investors to take advantage offered by the emergence of cryptocurrency to grow their businesses and Nigeria’s economy. He also explained the importance of understanding this new technology and termed it as the “future currency.”
Okoro stated that the company was created to enable people to buy and sell cryptocurrencies easily with local currencies. He added that the goal of Quidax is to provide liquidity and tools to power cross-border remittances in the emerging markets.
Quidax will partner with the organizers of Abuja Blockchain and Artificial Intelligence Roundtable in their quest to enlighten Nigerians on blockchain and cryptocurrencies, according to the CEO. It will also continue to seek and develop new partnerships that will help fulfill their mission.
During the presentation, Quidax’s boss added that there is a need for regulations in the cryptocurrency space in Africa. Okoro further said that the industry had been underutilized because there was a lot of ignorance among the public.
The company mentioned that, to help with their agenda, they have created a platform that is easy and secure. The platform will allow Nigerians to trade six cryptocurrencies, but didn’t specify which six. The company plans to add more than 20 cryptocurrencies in the coming future.
In addition to educating the public, the company also plans to create employment opportunities for the unemployed population in Nigeria.
African exchanges forced to upgrade security systems
Criminal activities targeting crypto exchanges have been on the rise in the last couple of years. This has forced exchanges in the continent to take measures. According to recent reports, crypto exchanges have been forced to increase their security measures to avoid losing customer money to scammers and hackers.
Records show that the region has lost millions of dollars to criminals in the cryptocurrency space. The most notable crypto crime in Africa happened in March 2018. The incident involved a fraudster at BTC Global, a supposed cryptocurrency investment firm in South Africa. The scam involved 28,000 unsuspecting South African inventors. It is believed that the criminals made off with about 1 billion rand ($80 million). Investors were lured with promises of huge returns within a short period of time.
The decision to safeguard investors’ money will help reduces fraudulent activities in the continent. This move will help protect the growing cryptocurrency markets and build confidence of those who still have doubts about cryptocurrencies.
While speaking to reporters, Suleiman Murunga, the CEO of Ugandan exchange Coinpesa, said his exchange has faced numerous attempts to breach their system. He explained, however, that unlike most exchanges, Coinpesa’s security system has been able to withstand all these attacks.
Murunga added that to maintain a secure platform they are constantly using tools to track user behavior in order to spot suspicious activities. Coinpesa and other cryptocurrency exchanges have also stopped storing investor funds in hot wallets to reduce hacking attacks.
According to reports, when a breach occurs, exchanges are not always to be blamed. In some cases, breaches occur due to ignorance and negligence on the part of investors. For instance, before Zimbabwean exchange Golix closed down, hackers were able to gain access to 23 customer accounts by taking advantage of vulnerable passwords. No money was stolen in the attack; however, account owners noticed some changes on their account.
Nigeria has also suffered significant cyber attacks. A hacking group from Ukraine allegedly committed one notable attack that led to the loss of $50 million. Local scammers pretending to offer various crypto services have also become a major problem in the country.
Exchanges hope upgrading security features will help solve some of these problems.
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
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