Rapid Growth of Cryptocurrency Users in Cameroon: Implications for Central Bank Regulations

2023-08-30 15:32:00

(Ecofin Agency) – Growing numbers that give more and more weight to the prospect of cryptocurrencies entering the central bank. This would imply full regularization and extensive regulation of the activities of this financial segment.

According to a study by the Cameroonian Ministry of Finance on the development of cryptocurrency and Ponzi scheme activities in the country, Cameroon currently has nearly 900,000 cryptocurrency users, or 6.76% of the population. active. This places it 11th in Africa for cryptocurrency users, a ranking dominated by Nigeria (22.33 million users).

« This number has increased sharply since the Covid-19 crisis, because the use of this currency does not require travel“, specifies Éric Pokem, deputy director of foreign exchange and transfers at the Department of financial and monetary cooperation of the ministry.

The study, the frequency of which is not specified, was carried out at a time when several companies supposed to operate in cryptocurrency (digital currency issued peer-to-peer without the need for a central bank, usable by means of a computer network decentralized) went bankrupt after scamming their customers. These include Mida, Mekit Invest, Chymal, Liyeplimal, among others.

These companies are accused of at the same time setting up a Ponzi system, a fraudulent financial arrangement consisting of remunerating subscribers not by the fruit of investments or investments, but by the funds provided by new customers.

The field survey focused on 18 companies offering ” cryptocurrency servicesand on 1,872 economic agents making placements in this field. It appears that their activities generally relate to investment advice on the financial markets, online buying/selling and management of crypto-asset portfolios. Investments in the cryptocurrency proper only concerned Global Investment Trading (GIT), holder of Liyeplimal, whose adherents were estimated at 90,000 for this activity in 2021.

Generally, relay Invest in Cameroon, investors have medium or low incomes, with only 4.9% of the population having a monthly income above 500,000 FCFA. The average client investment in cryptocurrency is $1,600, or around FCFA 800,000, while the average client compensation spend is $300 per week, around FCFA 150,000. The survey also notes that users take very little interest in the legal framework for these activities, and that just over 57% believe they are aware of the risks involved (scam, theft, bankruptcy, etc.).

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In the new regulation governing the financial market common to the countries of the sub-region (Cameroon, Central African Republic, Congo, Gabon, Equatorial Guinea, Chad), in force since the beginning of August 2022, the terms of “digital assets” and of “digital tokens” appeared. But this regulatory framework developed by the Central African Financial Market Supervisory Commission remains insufficient. The study therefore recommends contacting COSUMAF to clarify these terms and accelerate the finalization of the status of Digital Service Providers (PSAN) in consultation with the other CEMAC regulators.

To regulate cryptocurrency in the sub-region, it is also proposed to identify among companies operating in cryptocurrency, those that also use the Ponzi system and to close them immediately, to set up a multi-sectoral platform (MINFI, BEAC, COSUMAF, ANTIC, MINPOSTEL) to monitor cryptocurrency activities, and to study the possibility of introducing a central bank digital currency into the CEMAC zone.

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