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Why Ethiopia is moving from banning crypto to regulating it - Ventures Africaventuresafrica.com/why-ethiopia-is-moving-from-banning-crypto-to-regulating-it
207 sats \ 3 comments \ @KenyaCoin 3 Sep 2022 bitcoin
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10 sats \ 2 replies \ @KenyaCoin OP 3 Sep 2022
Despite the government’s frown on cryptocurrencies, Ethiopia has not slowed crypto adoption. The country has the seventh highest number of crypto holders in Africa, with 1.8 million bitcoin traders.
Ethiopians are seeking alternatives to their weakening currency. In June, the central bank said it detected a rise in the use of cryptocurrencies and other virtual assets and warned against it. But that same month, the Ethiopian birr lost 26 per cent of its value against the dollar on the black market.
The birr trades at 52.5 per dollar on the official market but is 82 per dollar on the informal market.
A civil war erupted in late 2020, costing Ethiopia donor support and duty-free access to US markets. Recently, the civil war resumed, so the dollar is not likely to get any cheaper anytime soon.
More so, Ethiopia’s inflation is spiralling out of control. Annual inflation jumped to 37 per cent in April — its highest since November 11 — before easing to 33.5 per cent in July. Ethiopia has the third-highest inflation rate in Africa, per Statista.
While it seems sceptical about digital currencies, Ethiopia is exploring innovative uses of blockchain technology. Last year, Cardano, one of the largest blockchain firms, partnered with the Ethiopian government to build a national identity system with blockchain technology. And while there has been plenty of backlash against Cardano’s operation in the country, Ethiopia would need to adopt a wait-and-see strategy.
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25 sats \ 1 reply \ @siggy47 3 Sep 2022
For the time being, does it seem that adoption is mainly in US dollar stable coins? That would make sense due to dollar strength and bitcoin's recent price drop.
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20 sats \ 0 replies \ @KenyaCoin OP 3 Sep 2022
I'm pretty skeptical about that 1.8m number.
There are no exchananges operating in the country (at least none that the banks will work with), and there's hardly any BTC/ETB offers on the P2P platforms. So where are these 1.8m people finding bitcoin / crypto to acquire?
But there are "blockchain" organizations pushing hard in a number of countries in Africa, and I suspect Ethiopia sees the same. These include Binance (pushing BNB/BUSD) and smaller ones even like Celo (CELO/cUSD).
You'll see events and gatherings where they'll show a room with a hundred people in attendance, but the draw was that the event was held at or near a college campus, was giving away free t-shirts, free food, and the hundred attendees were students there for that. So that doesn't mean all that many then hold or trade stablecoins.
As far as whether or not stablecoins are the current main use case, I don't know. Someone receiving remittance payment, for example, is likely going to be converting it to cash (local first -- ETB), so there isn't all that much time that the recipient is exposed to exchange rate risk. And bitcoin is like the common denominator. Easy for the sender to acquire as essentially every exchange trades bitcoin, and easy for the recipient to use for cashing out to fiat, or to spend, etc.
But I simply am speculating.
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