The Central Bank of Ghana (BoG) has repeated its cautionary firm stance to institutions and the general public against trading of cryptocurrencies in Ghana, citing possible existing risks which it believes could jeopardize the nation’s financial sector if left unchecked.
The governor of the central bank, Dr. Ernest Addison, revealed this in keynote remarks during the 2022 Annual Bankers’ Dinner organized by the Chartered Institute of Bankers (CIB) in his honor.
According to him, this comes as a watchdog to gain a robust institutional understanding of key concepts in the burgeoning digital finance space, by monitoring developments across the globe and reviewing several regulatory and global standards-setting bodies across various jurisdictions.
“The Bank still stands by its cautionary statement to the public on the dangers associated with crypto transactions as contained in several notices in the past. Interested parties need to be wary about potential losses that could occur when trading in crypto. The Bank stands by its earlier directives and the notices issued on March 9 2022, that all licenced institutions should refrain from facilitating crypto transactions via their platforms or agent outlets.”
Dr. Ernest Addison
In the previously stated directives and a similar one issued in 2018, the financial sector regulator stated clearly that cryptocurrencies, the most popular being Bitcoin (BTC) – remain unregulated under any laws in the country, and as such do not have any safeguards since they are not backed by guarantees.
Dr. Addison clearly added that, his outfit will not impose an outright ban on cryptocurrencies, as it considers such a line of action futile due to the decentralized and borderless nature of the asset class.
Adding up to that, the governor assured the public that, BoG will continue to keenly monitor happenings in the space and allow for the development of crypto and blockchain-leaning products within the confines of its regulatory sandbox, even as it works with other regulators toward a possible regulatory framework.
“In all of these, the clearest takeaway for the Bank is the fact that cryptocurrencies are digital assets and not currency; and inasmuch as crypto is associated with other key risks including volatility, cyber theft, loss of funds with a potential threat to financial stability, an outright ban has proven ineffective mainly due to its decentralised and borderless nature.
“Consequently, the Bank intends to continue allowing blockchain in our regulatory sandbox as the first step while we continue to examine a comprehensive regulatory framework for the digital asset industry.”
Dr. Ernest Addison
Global Development And Issues Relating to Cryptocurrencies
According to Dr. Addison, regulators have been on edge recently, as cryptocurrencies have come under renewed scrutiny following a series of scandals in the ecosystem, most notably the crash of leading cryptocurrency exchange FTX
On November 11, FTX which allowed for the trade of cryptocurrencies filed for bankruptcy and it emerged that, the exchange had been hacked, leading to more than US$600million in cryptocurrency disappearing from customers wallets, he added
Not limited to that, he also disclosed that, corporate governance practices which has drawn parallels to the collapse of Enron, also emerged that FTX had only US$900million in assets to offset liabilities in excess of US$9billion.
According to some analyst on the global continent, the fallout has seen the price of the industry, leading BTC crash to around US$16,000. It was in the region of US$57,000 a year ago. They have also expressed worry over high levels of exposure for individuals and businesses, as some leading FinTechs are suspected to have some of their assets with FTX.
Data contained in the ‘Global Crypto Adoption Index’, published by Chainalysis, indicated that, sub-Saharan Africa is a hotbed for crypto usage on account of the clamour for high returns, the desire for lower cross-border transaction fees, as well as activities of criminal element.
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