February 14, 2023

Rwanda Urges To Stop Facilitating Crypto-related Transactions

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Rwanda’s government called on banks to stop facilitating crypto-related transactions, citing the status of high risk and unsafety, Bitcoin News reported

The National Bank of Rwanda (NBR) noted that the country’s financial services providers are prohibited from engaging in any crypto-related activities until the outlining of a regulatory framework, according to a letter sent by NBR to CEOs and managing directors of financial services providers. 

In this regard, NBR Acting Governor Soraya Hakuziyaremye claimed that the prohibition would create safe and efficient financial services, pointing to the unregulated status of most crypto assets and how this leaves users without the guarantees and safeguards associated with regulated financial services.

In her letter, Hakuziyaremye justified the bank’s decision, saying: “Although crypto asset activities are still limited and therefore, do not pose substantial risks to [the] financial and monetary system of Rwanda, the NBR is concerned about the involvement of the financial institutions in crypto activities.” 

The acting governor pointed out that there are some Rwandans who are still trading digital assets like bitcoin, although the bank warned against crypto-related activities, adding data showed that over $3 million were traded on the Rwandan market since January 2020. 

Earlier in November, The International Monetary Fund (IMF) called for more regulation of the crypto industry and greater consumer production in African countries, according to a blog published by the global financial institution.

IMF referred to policymakers’ concerns that cryptocurrencies could be used to illegally transfer funds out of Africa and get around local rules to prevent capital outflows. The blog said: “Widespread use of crypto could also undermine the effectiveness of the monetary policy, creating risks for financial and macroeconomic stability.”

Despite being one of the fastest-growing crypto markets in the world, Africa’s crypto market is still the smallest in terms of crypto transactions reaching $20 billion per month in mid-2021, according to Chainalysis. Africa’s crypto market increased in value by more than 1,200% between July 2020 and June 2021.

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