NAIROBI, Kenya, Jul 6 – Whilst the majority of cryptocurrency trades are safe, in recent years, the sector has not proved completely immune to scams and fraudulent transactions.
With the cryptocurrency industry still fairly new, scammers prey on users who lack the appropriate awareness in this space.
We sat down with Kombe Kaponda, from AGA – Africa to discuss the state of cryptocurrency use in Africa and its effects.
Question: What is your take on the growth of Cryptocurrencies in Africa?
Great question and greatly appreciated. Reminds me of when someone was joking and asked “Who led the digital transformation in the Banking industry in Africa? (A) The CEO (B) The CTO (C) COVID-19.”. Of course, it is COVID-19 but regardless of a crisis being small, medium sized or large, the effects of COVID-19 has demanded a lot of changes in the life of many organizations on the continent.
Cryptocurrencies were introduced to the world after the 2008 Global Financial Crisis (GFC) and the mysterious 2009 white paper on Bitcoin by Sotoshi Nakamoto. The COVID-19 disruptions also speeded up the advancement of most emerging technologies and innovation and the African region should fully embrace these technologies including Cryptocurrencies, the use of Artificial Intelligence (AI) for productivity and finance, Blockchain technologies, Big data and Data-science tools, Central Bank Digital Currencies (CBDC), the use of Robotics to replace repetitive mandeni tasks and activities, Machine learning and deep learning algorithms.
Africa should continue to embrace and take advantage of the merits of cryptocurrencies and the underlying blockchain technologies and harness the ways to mitigate all the risks, to effectively collaborate, harmonize regional and international standards for interoperability, continue being agile, keep investing in people, investment in systems and technologies that work for the African region.
Question: What are the different regulatory concerns around cryptocurrencies especially across different African country jurisdictions?
They say “safety is in the Genes of all Central Banks”, and with the advent of cryptocurrencies from the mysterious 2009 white paper on Bitcoin, central Banks have issued many cautionary statements on the down side of using these currencies.
The main concerns are around the anonymity, volatility associated with some decentralised cryptocurrencies that pose risks on the customer and there is no consumer protection later on no recourse if these cryptocurrency transactions are fraudulent and go against the customers. There are also bad vices that are associated with the anonymity of these currencies such as the use for illegal trade on the dark web in arms, drugs, credit cards, use for human trafficking and drug trafficking and for ransomware claims.
The many regulatory concerns are around the fact that central banks are proceeding with caution and most are only at a conceptual stage with their work on the regulations of these decentralized and volatile cryptocurrencies. However, a handful have moved to considering practical issues of the stable coins that are backed by actual assets and a couple of central banks with idiosyncratic circumstances might issue Central Bank Digital currencies (CBDC) to mitigate the risks posed by other unstable cryptocurrencies. We have seen the central Bank of the Bahamas launch the sand dollar and china soon to launch this year.
Question: How is AGA-Africa equipping the law enforcement officer on effective investigation and prosecution of cryptocurrencies?
AGA-Africa acknowledges that the cryptocurrencies space keeps evolving and effective and practical hands on training on how to investigate cryptocurrency related crimes and Trade based money laundering is the most practical way in equipping the law enforcement officer to successfully investigate and prosecute these crimes.
AGA-Africa needs to continue providing the officers with specialise into digital forensics training so that the officers will always be one step ahead of the criminals. The enforcement officers should also collaborate and network with partners around the globe in order to have higher chances of prosecuting these multinational and cross boarder crimes.
Question: What do you see as the emerging training needed for different legal enforcing departments as cryptocurrencies become more prevalent?
The main training needs for the different legal enforcing departments is to first understand the cryptocurrencies underlying technologies such as the blockchain and how the are used in most of these crimes and Trade based money laundering offences. It is very clear that “You can not investigate what you cannot understand”.
As cryptocurrencies become more prevalent across the globe, there is an increasing need for investment into Digital forensics and investment in tools and technologies to assist conduct these effective hands on training to improve the conviction rates and effectively fight these cryptocurrency crimes.