The latest data from the United Nations Conference on Trade
and Development (UNCTAD) suggest that Kenya has the highest proportion
of crypto-owning inhabitants than any other African country. To counter
the growing use of cryptocurrencies, UNCTAD said it recommends the
imposition of taxes that discourages crypto trading.
‘A Way to Protect Household Savings’
According to the data
in the latest (UNCTAD) policy brief, Kenya’s digital currency ownership
as a share of the population of 8.5% is the highest in Africa and the
fifth-highest globally. Only Ukraine with 12.7%, Russia (11.9%),
Venezuela (10.3%), and Singapore (9.4%) have a higher proportion of
crypto-owning residents than Kenya.
As the data shows, South Africa is the second-ranked country in
Africa and eighth globally, with 7.1% of the population that owned or
held cryptocurrencies in 2021. In Nigeria, which is one of the biggest
cryptocurrency markets globally, about 6.3% of the population own or
hold cryptocurrencies. Using the UNCTAD data, this means from the
country’s population of 211 million inhabitants, just over 13 million were owners of digital currencies in 2021.
Out of the 20 countries that were surveyed, Australia was found to
have the least percentage of its population (3.4%) that owned
cryptocurrency in the said period.
Meanwhile, in a report on its findings, UNCTAD acknowledged that
cryptocurrencies have grown in their popularity because they are “an
attractive channel through which to send remittances.” The UN agency
also said it found that middle-income individuals from inflation-hit
developing countries own or hold cryptocurrencies because these are seen
“as a way to protect household savings.”
Mandatory Registration of Crypto Exchanges
However, based on its findings, the UNCTAD said it determined that
“the use of cryptocurrencies may lead to financial instability risks.”
In addition, their use potentially opens “a new channel for illicit
financial flows.”
“Finally, if left unchecked, cryptocurrencies may become a widespread
means of payment and even replace domestic currencies unofficially [a
process called cryptoization], which could jeopardize the monetary
sovereignty of countries. The use of stablecoins poses the greatest
risks in developing countries with unmet demand for reserve currencies,”
UNCTAD noted in the policy brief.
To minimize some of these risks, UNCTAD said it recommends “the
mandatory registration of crypto-exchanges and digital wallets.” The
agency also recommended imposing “entry fees for crypto-exchanges” or
levying taxes on cryptocurrency trading. Doing this would make the use
of cryptocurrencies less attractive, UNCTAD said. Other recommendations
include restricting cryptocurrency advertisements and the issuing of a
central bank digital currency (CBDC).
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