3 Major Trends To Expect From Africa’s Crypto Sector In 2022
Leading experts are continuously exploring the opportunities and untapped potential embedded in the crypto and blockchain industry. For the global cryptocurrency industry, 2021 is likely to secure a significant spot in the history books of crypto, as one of the years Bitcoin broke past its all-time high price level and bolstered the entire sector even closer towards mainstream acceptance and widespread use.
However, from a regional perspective, it is also arguably the year when Africa stole the spotlight in the crypto sphere.
The surge in crypto adoption in Africa this past year was mind-blowing. The launch of Africa's first central bank digital currency (CBDC) and the Central Bank of Nigeria's circular on digital assets demonstrates how hard it is to navigate any of the key conversations surrounding the sector without referencing crypto activities in Africa.
According to Marius Reitz, the General Manager for Africa at Luno, a leading global cryptocurrency, there are three key trends we should expect to see in the continent throughout the year 2022:
Regulating crypto in Africa has been quite eventful. Africa looks to strike the balance between preventing scams and promoting growth. Last year, major economies in the continent adopted a more proactive stance on user security and consumer protection with the introduction of blanket bans. Several countries adopted this strategy and the results so far have been distant from ideal with trading activity being pushed underground and regulators left with a reduced level of visibility of the sector.
In light of this, regulatory bodies are rethinking regulation in Africa’s crypto sector by working with industry players and experts in the fields to establish a more robust and effective framework, which has the propensity to promote the trend across countries.
Following China's regulation, it's easy to see that blanket bans do so little when it comes to limiting trading activity and protecting consumers. However, experts who understand the nuances of the novel and burgeoning space can provide a huge amount of value on how consumers can be protected from risks.
Kenya In It For The Long Haul
With Nigeria's crypto ban making the rounds and dominating headlines in 2021 right before the launch of the CBDC, Kenya made a significant development that slipped under the radar. The country ranked as the world's leader in P2P trading volumes for the second time in a row.
Kenya’s crypto industry is thriving with a rapidly growing crop of companies developing and establishing blockchain-based solutions. With high-power levels of mobile connectivity and familiarity with digital payment solutions such as mobile money and a vibrant young population, Kenya is well equipped and firmly positioned to become a top-tier crypto hub that will lead East Africa in 2022.
However, one major drawback is that crypto education is somewhat understated in Kenya. According to Luno’s 2021 consumer research survey, 64% of Kenyans do not invest in cryptocurrencies because they don’t just understand the concept of digital assets. Most of these Kenyans were also found soliciting financial aid from conventional systems before making investment decisions.
A Novel Solution To Africa’s Remittances Problem
Across Africa, investments are currently the most prevalent use case for crypto assets. However, one area that could receive a major boost this year is remittances.
World Bank's report shows that the total remittances in Sub-Saharan Africa alone were over $45billion in 2021 but the lack of foreign currency reserves across Africa has prevented several companies from receiving international payments and remitting their profits and this will drive many businesses towards crypto as an alternative means of seamless transaction across borders.
The key strength of cryptocurrencies in this aspect of concern lies in the decentralized and permissionless network of blockchain technology that supports them, allowing the easy transfer of money without lag times, middlemen, or exorbitant transaction costs. As long as a favourable regulatory climate governs the continent's crypto sector, this novel solution to remittances problem could make crypto emerge as a major asset for companies with extensive operations in Africa.
There’s no denying that the above-listed trends will have a high influence on further developments in Africa’s crypto sector. However, they are not the only trends to expect. Institutional investment into the continent’s crypto space is another trend that could take the industry by storm. The rapidly growing sector is also attracting world-class talent and gaining attention from top-level media outlets that are dedicating more resources to quality reporting. We should expect this to continue.