[ 2021-02-22 ]

Regulate cryptocurrencies now – Economist to BoG, SEC
Economist and Dean of the University of Cape Coast
Business School, Prof. John Gatsi, has urged
regulatory bodies – the central bank (BoG) as
well as the Securities and Exchange Commission
(SEC) – to as a matter of extreme urgency
step-up measures for the regulation of
blockchain-backed cryptocurrencies.

He argued that Ghana is not insulated from the
significant developments in the cryptocurrency
landscape; as such, it would be imprudent for the
key stakeholders to adopt a nonchalant attitude
now and begin to scurry for regularisation when
the impact is clearly felt locally.

Calling for a clear cryptocurrency regulatory
regime for the alternative asset class, Prof.
Gatsi reasoned that the effect will be two-fold;
on the one hand, protect potential investors from
investing n assets which have no regulatory
backing; and on the other, harness whatever
potential benefits there are to gain from its
regularisation

“Investors need to be educated to see that the
burden, risk, bane and fallout from investing in a
non-regulated asset is theirs alone. It is
important that BoG and other regulatory bodies
provide definite frameworks to give the confidence
of participation, as investors should not be
participating in an unregulated asset,” he said
in an interview with the B&FT.


“We all know that the whole world is going
through digitisation, with some ahead of others.
We ourselves are touting the era of digitization,
and the implication is that there will be much
more interest in virtual currencies, transactions
and exchanges; we should therefore rise to the
occasion by providing protection and curbing
fraud.”

He added that since there is an uneasy calm
following the financial sector clean-up, it would
be judicious for concrete measures to be put in
place to avert high-level, wide-scale scandals of
a financial nature – and stated that
sensitisation on red flags to look out for when
investing must be heightened.

Anti-Money Laundering (AML) concerns

While Prof. Gatsi believes that cryptocurrencies
are a possible tool for money-laundering, he
argues that it might be unfair to treat them
solely as a medium for criminal activities –
stating that for all tools of exchange, regulation
– and more importantly, its implementation –
is the most significant factor in curbing the
illicit flow of funds.

However, a cybersecurity analyst who did not want
to be identified stated that from the data he
interacts with, contrary to widely-held beliefs,
cryptocurrecny usage in the country is relatively
quite high.

He added that while it is used for a plethora of
activities, there are reasonable grounds to
believe that some elements are using it for the
illicit flow of funds – which could have a
bearing on the nation’s recent anti-money
laundering (AML) and counter-terrorist financing
(CTF) gains.

He therefore added his voice for clear-cut
regulations, stating that in the current
dispensation, “cryptocurrency trade in the
country cannot be called illegal; it is
unregulated”.

BoG’s statement

Already, a BoG statement dated 22 January 2018
shows the Bank’s acknowledgement of
cryptocurrency trading activities.

“The Bank of Ghana has taken notice of recent
developments in the use, holding and trading of
virtual or digital currencies (also known as
cryptocurrencies), such as Bitcoin, in Ghana. The
Bank of Ghana wishes to notify the general public
that these activities in digital currency are
currently not licenced under the Payments System
Act 2003 (Act 662),” the statement reads.

It proceeds to outline measures being taken by the
Bank to ensure regulation before adding: “While
the Bank of Ghana acknowledges the enormous
potential in the block-chain technology and how
that can significantly transform the payments
system landscape and promote financial inclusion,
we are assessing with stakeholders and other
international partners how the subsequent use of
the block-chain technology into digital currencies
would fit into the global financial and payments
architecture.

“The public is therefore strongly encouraged to
do business with only institutions licenced by the
Bank of Ghana, to ensure that such transactions
fall under our regulatory purview.”

In the three years which have elapsed since the
issuance of that statement, measures appear to be
proceeding at snail’s pace locally – while
developments are happening rapidly on the global
stage.

Global developments

Since turn of the year, recent developments in the
cryptocurrency landscape globally have been in
opposite directions – and that is to be expected
for such a polarising asset class.

Closer home, Nigeria – the world’s
second-largest Bitcoin market after the United
States – has banned the trading of
cryptocurrencies. Nigeria’s central bank, CBN,
instructed commercial banks and other financial
institutions to close accounts involved in
transactions with cryptocurrency exchanges –
citing money laundering and terrorism-financing as
reasons for the move.

This caused widespread public condemnation with
accusations of excessive high-handedness, and the
swiftness of the move gives foreign investors
reason to question how policies with far-reaching
implications can be announced and implemented so
swiftly.

In India, government recently announced plans to
introduce a law banning trade in all
cryptocurrencies – except for those issued by
government itself. On the other side of the aisle,
particularly in the West, large corporations are
getting behind cryptocurrency.

Mastercard recently announced that it will be
bringing support to cryptocurrencies, albeit ones
that meet certain criteria – including
stability, privacy, and compliance with money
laundering laws.

Tesla, owned by the world’s richest man, Elon
Musk – himself an advocate for cryptocurrencies,
recently announced that it has bought
US$1.5billion worth of Bitcoin, with the company
adding that it will start accepting Bitcoin as a
payment method for its products.

Furthermore, the world’s largest asset manager,
Blackrock, announced last week that it has
“started to dabble” in cryptocurrency,
specifically Bitcoin.

This has seen the most popular cryptocurrency
appreciate exponentially in value, by more than
1,100% from the corresponding period last year;
with the rally resulting in an All Time Hgh (ATH),
as it crossed the US$50,000 value threshold for
the first time this month. The surge has not been
limited to Bitcon, as Ethereum – the
second-largest cryptocurrency by market
capitalisation and volume, has also seen
significant appreciation in value.

Source - B&FT

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