It is ten years since Bitcoin started trading spawning myriad other cryptocurrencies. There are now 2,400 digital currencies and growing. Even governments have been creating their own. Bitcoin and its descendants have become such a part of life that they are already been taxed in some countries. In Israel, for example, they are taxed as an asset and in Switzerland as foreign currency. In Argentina and Spain, they are taxed as income. If the virtual currencies are being taxed, it means acceptability that has gained them legitimate status in the jurisdictions that have embraced them, including those that have already created their own. Last week, local economists and tech leaders were urging the government to create the country’s first digital currency. It has been in the public domain for some time now that the National Bank of Rwanda has been considering it, and has actually been looking at research from other central banks. Though NBR Director-General of the Financial Stability, Peace Uwase, explains that Rwanda is not ready just yet, as she recently told Bloomberg, the economists are convinced it is about time the country adopted its own cryptocurrency. I would extend it further and argue that it is not just Rwanda but the East African Community, as the process towards single currency proceeds, to consider its own digital currency. Of course, the concerns remain of the currencies’ extreme volatility and other high risks. But these concerns don’t seem to shave topped the taking up of the digital money elsewhere. A recent survey by the US Library of Congress on legal and policy landscape surrounding cryptocurrencies around the world shows that not all countries see the advent of cryptocurrencies as a threat; it shows increased adoption. One of the reasons for the growing adoption is the proliferation of the thousands of cryptocurrencies. This has prompted more national and regional authorities to not only grapple with their regulation, but increasing make some countries to have their own. A number of countries, including in Africa, already have or are in the process of developing their own system of cryptocurrencies. Tunisia stands out as the first country in the world to issue an official digital currency, the e-Dinar, in 2015. Senegal was second in Africa having issued the eCFA, the digital version of the CFA Franc, in December 2016. The CFA Franc being the legal tender for the more than 10 former French colonies in West Africa, the aim was to eventually roll out the eCFA in these countries. If it is about examples, the EAC can look to the west of the continent to learn from their success and challenges, of which there have been a number. It should keep abreast of members’ digital plans and start developing requisite monetary policy. Other countries around the world that have issued their own cryptocurrencies include China, Singapore and Ecuador. Countries including Russia, Japan, Estonia, Sweden and Palestine are on the verge of launching their own national cryptocurrencies. For most of the others, one of the most common actions identified across the jurisdictions in the Law Library of Congress survey is government-issued notices about the pitfalls of investing in the cryptocurrency markets. The warnings, mostly issued by central banks, are largely designed to educate the citizenry about the difference between actual currencies, which are issued and guaranteed by the state, and cryptocurrencies, which are not. This is the situation we in the EAC currently are. While not banning citizens from investing in cryptocurrencies, they are cautioned it is at their own personal risk because no legal recourse is available in the event of loss. It is emphasised that many of the organisations that facilitate such transactions are unregulated. It could be that the EAC countries stance is not unlike that of such as Belgium, South Africa, and the United Kingdom. They have determined that the size of the cryptocurrency market is too small to be cause for sufficient concern to warrant regulation and/or a ban at this juncture. However, when I think of cryptocurrencies, I think of the mobile money and the perceived risks associated with pseudo banks before the platform was adopted. Central banks in the region took the plunge with the necessary measures and let it play. If they had not, we would not be witnessing the runaway phenomenon of mobile money to include and empower. Digital currencies could turn out to be just as phenomenal. As the economists and tech leaders were suggesting, it is worth consideration to create virtual currency. The views expressed in this article are of the author.
