Ghana is gearing up to be one of the next African countries to formally regulate cryptocurrencies. The development signals a shift in its previous stance that had banned local banks from facilitating crypto transactions.
On August 16, the Bank of Ghana (BoG) unveiled draft guidelines aimed at regulating digital assets, specifically focusing on virtual asset service providers (VASPs) like crypto exchanges. The release of those draft rules was critical for a which took a more hands-off approach.
The Bank of Ghana’s proposal came after an internal review that lasted three years. According to the BoG, the country has experienced a surge in the use of crypto, with the number of Ghanaians involved in crypto transactions rising dramatically between 2021 and 2023.
This takeup is not unlike trends across Africa, where hundreds of millions turn to digital assets for investment, remittance, and everyday transactions. For a country where remittances play a key economic role, crypto brings a new way to facilitate international money transfers outside traditional banking.
Nigeria, the region’s biggest economy, just started issuing crypto licenses to virtual asset service providers in a major turnaround. It’s how other African nations tame bull; Ghana is now taking steps to align.
BoG’s prospective guidelines aim to address growing concerns around risks related to money laundering, terrorism financing, and fraud. The proposed policies would require VASPs for strict monitoring and reporting protocols, particularly regarding suspicious transactions.
The central bank’s efforts align with international standards, drawing heavily from the Financial Action Task Force’s (FATF) guidelines, specifically the Travel Rule, which mandates sharing of transaction information between VASPs.
“We are committed to ensuring that this sector operates within a safe and secure framework,” a BoG official stated, hitting hard on the essence of balancing innovation with oversight.
Under the proposed rules, crypto exchanges will be subject to stringent registration and reporting. VASPs must register with the BoG, and those seeking to operate locally must undergo sandbox testing to ensure compliance. This approach aims to protect consumers Additionally, the Bank has invited public and industry feedback.
The measures place strong emphasis on consumer protection. Scams and fraud schemes have proliferated in Africa, raising the stakes for authorities. The guidelines would enforce anti-money laundering (AML) and counter-terrorism financing (CFT) protocols, as well as rigorous Know Your Customer (KYC) requirements.
Several markets here are still figuring out how to treat crypto right. Nigeria, for example, implemented a ban on banks facilitating crypto transactions in 2021, which led to a rise in peer-to-peer trading. However, the recent issuance of crypto licenses suggests that Nigerian regulators are adopting a more structured approach.
In South Africa, over 130 companies have registered under its crypto regulations, while Kenya has struggled with unregulated crypto activity despite issuing warnings about potential risks. Ghana’s move from ban to regulation models well for other African markets. A more nuanced approach can prevent some drawbacks seen in countries with stricter bans.
Despite this progress, the BoG maintains caution. Local banks and payment service providers remain prohibited from engaging directly with cryptocurrencies until the new rules are formalized.
Policymaking is also part of a broader effort by the BoG to explore blockchain technology beyond cryptocurrencies.
The bank has expressed interest in examining how blockchain could enhance areas like financial services and payments. This exploration ties into the BoG’s earlier efforts to develop a Central Bank Digital Currency (CBDC), known as the eCedi, which is still in its pilot phase.
As rules take shape, the country could go on the map as a regional example if implemented successfully. However, much depends on the manner of execution and how well the country can balance oversight with innovation.
