Regulating Cryptocurrency: Key to economic stability and consumer protection

The Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama at the recent Africa Leaders and Partners Forum stated that the Central Bank has started the necessary step to regulate the cryptocurrency industry in Ghana by September 2025.
This statement by the new Governor is a major shift in the earlier position in 2018, when the Central Bank considered cryptocurrencies as illegal assets.
The decision for the regulation could not have come at a better time than this since there is a coordinated effort around the globe to regulate the digital assets space.

Cryptocurrency regulation within the subregion
The top 5 African countries whose communities are adopting Bitcoin are South Africa, Nigeria, Zimbabwe, Kenya, and Ghana. They have the most demand for digital currency as well as the most active local cryptocurrency communities.
In addition, according to bitcoin.com South Africa, Nigeria and Kenya appear in the top 10 countries by Cryptocurrency Adoption worldwide.
Nigeria has one of the most dynamic peer-to-peer Bitcoin trading markets in the world, but so far the country has banned Cryptocurrency and warned its citizens that Bitcoin investments had no legal cover.
On January 12, 2017, the CBN (Central Bank of Nigeria) warned all the Banks and Financial institutions in Nigeria to never use, hold, trade, or transact any virtual currency.
On the 5th of February 2021, the CBN has ordered banks across the country to close the accounts of anyone who deals in cryptocurrency.
Not only Nigeria but also Morocco, Algeria, Libya, Egypt, Zambia, Zimbabwe, and Namibia have banned the use of cryptocurrency.
In Kenya, the government is neither receptive nor prohibiting cryptocurrency, however, they also warn their citizens that it is not legal tender, so they do not provide any protection for any failure that can appear in the cryptocurrency businesses.
In South Africa, there are no specific laws or regulations that address the use of virtual currencies, however, they have made a Crypto Assets Regulatory Working Group that is reviewing the country’s position on crypto assets.

Trends in Europe
The trend in Africa is a sharp contrast to that in the advanced countries, the European Union has developed a cryptocurrency regulatory framework called Market in Crypto-Asset (MiCA) regulation to oversee the activities of digital assets operating firms in Europe.
Though the United State of America Security and Exchange Commission (SEC) is still in the process of developing a regulatory framework for the crypto market, there is huge public interest in the asset.
Some states in the United State have passed bills for a proportion of reserves to be in cryptocurrencies and this confirms the traction that digital assets are gaining.
In Ghana, regulating digital assets is critical for economic stability, financial stability and consumer protection.

Consumer protection
Though not a very large number, there are thousands of Ghanaians who have been trading in cryptocurrencies using both unregulated local and international platforms and since these platforms are not regulated in Ghana, the central bank does not have records on the market capitalisation of the assets which will be used to establish the percentage of the money supply in the economy that has been accumulated in the cryptoassets.
At the moment cryptocurrency traders in Ghana use platforms or exchanges that the office location cannot be traced and the operations shrouded in secrecy.
The present situation therefore has made it that as long as the crypto space remains unregulated, the money supply data remains inaccurate.
A regulated space will therefore give both local and international platforms to register with the Regulator and just as within the Universal Banking space these platforms will be made public to help interested consumers to properly invest or trade.
At the moment cryptocurrency traders in Ghana use platforms or exchanges that the office location cannot be traced and the operations shrouded in secrecy.
Therefore, regulating the crypto industry will go a long way to protect the interest of consumers.

Currency stabilization
Another key advantage of a regulatory crypto space will be to help in the stabilization of the local currency.
The Central Bank can use backed cryptocurrency called STABLECOINS to address fluctuation of the exchange rate.
Some elements of the depreciation of the Ghanaian cedi are caused by demand and supply of foreign currencies and Stablecoins are noted to peg with a fiat currency such as the United State dollar.
This means individuals or firms who need foreign currency such as the United State dollar can just buy a stable coin using the Ghanaian cedi and subsequently convert it to the United State dollar as and when needed.
Consequently, regulating the cryptocurrency industry will give the opportunities for people to use the Ghana Cedis to obtain foreign currencies without using the foreign exchange market and thereby easing pressure on the local currency depreciation.

Stability of the financial markets
Also regulating the crypto market will bring stability in the financial markets.
Under the current blanket ban or the central bank notice of regarding cryptos as illegal assets, some investors continue to invest in the assets through unauthorised route.
This has brought about transfer of resources from the mainstream asset markets to the digital assets market resulting in liquidity reduction in the recognised financial markets.
In addition, regulating the cryptocurrency markets will provide investors with options in the financial assets market to diversify when building portfolios.
In conclusion, regulating cryptocurrencies will protect investors and the general public against any toxic investments.
The Ghanaian investor will have full information on the firms issuing the cryptoassets and the type of assets that the license permits them to issue.
Though, the Bank of Ghana has indicated the release of the proposed regulatory framework in September 2025, it is hopeful that the framework will cover all necessary areas so as to help other countries emulate from our Central Bank.
Digital assets have evolved over the years since the introduction of the first cryptocurrency – Bitcoin in 2008 and the move by the central bank to introduce regulation is a step in the right direction and commendable.

The writer Thompson Rexmond Kotey is economist, analytics consultant and digital assets expert