Africa should be leading the way in the burgeoning cryptocurrency market, affirms the head of Africa at deVere Acuma, part of one of the world’s largest independent financial services organisations.
The comments from Gavin Smith come as Bitcoin, the world’s largest and dominant digital currency recently bounced 40 per cent higher within a month, with the wider cryptocurrency market receiving a positive upswing as a result.
It also comes amidst growing calls for the regulation of cryptocurrency on a global level. South Africa too is heeding this call, with the South African Reserve Bank’s (SARB) deadline for public submissions on policy and regulations of crypto assets closing in February. On international shores, the UK government’s Crypto Assets Task Force has also released a final report.
Mr Smith observes, “There is increasing consensus that cryptocurrencies are inevitably the future of money. It simply makes sense to have digital, global currency in an increasingly digitalised and globalised world.
“This is why governmental agencies and regulators are now closely looking into the space and why a growing number of retail and institutional investors, including major financial institutions, around the world are piling into the crypto market.”
He continues, “It’s my belief that the cryptocurrency sector is one in which the African continent should be playing a leading role.
“There is clearly scope for the continent to help alleviate poverty, grow economies and create jobs.
“There remains an enormous percentage of people across Africa who are unbanked. Cryptocurrencies allow people to access financial services with very small amounts of money. Therefore, these digital currencies will be able to speed up the advance of financial inclusion. They can provide access to financial services, including remittances, for millions of people who live in remote areas or who might normally not be able to use financial services because of the biases of traditional financial firms.”
Mr Smith goes onto add, “On a wider note, those jurisdictions which have embraced the sector of cryptocurrencies and the phenomenon of blockchain technology – the revolutionary tech that underpins them – have benefitted economically.
“Governments can bolster their coffers, giving them greater spending power, by raising tax revenues through cryptocurrencies and by encouraging entrepreneurs and fintech firms to invest in their countries by setting job and wealth-creating firms.”
In Malta for example, the government is working with the private sector to identify changes to be made to accommodate cryptocurrency and blockchain. These regulations establish Malta as one of the world’s first blockchain regulated states with legislative frameworks for virtual currencies.
This helps the country to attract international businesses looking to establish blockchain based businesses and use virtual currencies. “Malta has become an attractive option for entrepreneurs and investors from all over the world; it could even become a central point for digital innovation,” says Mr Smith.
In Japan, cryptocurrency is legal and gains are taxed, as it is seen as property under the Payment Services Act. Japan has the most progressive regulatory climate for digital currencies globally.
Switzerland too is known to have a progressive stance in terms of cryptocurrency – where it is considered legal and viewed as an asset that is subject to Swiss Wealth Tax and must be declared on annual tax returns.
Globalisation has created a demand for a currency that is not controlled by a central bank or government, that will be instrumental in growing world economies; a positive trend as opposed to a passing fad,” Mr Smith points out.
“One thing is certain, digitisation has changed almost every aspect of the way in which we live and work. In this landscape, cryptocurrency provides a digital alternative to fiat money (government-issued currency that isn’t backed by a commodity) that is here to stay,” he concludes.