Dr. Mohammed Amin Adam, Minister of State at the Finance Ministry, has iterated the ministry’s stance on banning of crypto currencies. He stated that nothing has changed.

According to the Minister of State at the Finance Ministry, the government prohibited the use of cryptocurrencies in all financial transactions, emphasizing that all financial institutions in the country have received instructions to refrain from engaging in crypto-related activities.

“While the government remains open to exploring associated technologies, such as blockchain and distributed innovations, within a controlled framework, we are currently in the process of developing comprehensive guidelines.

“Until such a framework is established, we reiterate our directive as conveyed through various notices, including the one issued on March 9, 2022. This directive explicitly prohibits all institutions licensed by the Bank of Ghana from facilitating cryptocurrency transactions through their platforms or agent outlets.”
Dr. Mohammed Amin Adam

In April 2022, the Central Bank issued cautionary directives to banks and other financial entities regarding their involvement in cryptocurrency trading and other unregulated investment schemes.

The objective of these measures is to ensure the regulation and integrity of the digital space concerning cryptocurrency activities, protecting consumers and the financial system from potential risks and fraudulent schemes.

The government aims to create a robust and secure framework that addresses the complexities associated with cryptocurrencies and enables responsible usage in the future.

Cryptocurrencies, such as Bitcoin and Ethereum, are digital or virtual currencies that use cryptography for secure financial transactions, control the creation of additional units, and verify the transfer of assets. They operate on decentralized networks known as blockchains.

Other African Countries Embrace Cryptocurrencies

While Ghana does not embrace crypto currencies, other African countries do. In fact, Africa is one of the fastest-growing crypto markets in the world, according to Chainalysis, but remains the smallest, with crypto transactions peaking at $20 billion per month in mid-2021. Kenya, Nigeria, and South Africa have the highest number of users in the region. Many people use crypto assets for commercial payments, but their volatility makes them unsuitable as a store of value.

Policymakers are also worried that cryptocurrencies can be used to transfer funds illegally out of the region and to circumvent local rules to prevent capital outflows. Widespread use of crypto could also undermine the effectiveness of monetary policy, creating risks for financial and macroeconomic stability.

The risks are that much greater if crypto is adopted as legal tender – as the Central African Republic recently did. If crypto assets are held or accepted by the government as means of payment, it could put public finances at risk.

The Central African Republic is the first country in Africa, and the second in the world after El Salvador to designate Bitcoin as a legal tender. The measure has put the country at odds with the Bank of Central African States (BEAC)—the regional central bank that serves the Economic and Monetary Community of Central Africa (CEMAC), which the Central African Republic is a member of, and violates the CEMAC Treaty. BEAC’s banking sector supervisory body, Central Africa’s Banking Commission has banned the use of crypto for financial transactions in the CEMAC region.

However, with the many African countries as listed above using cryptocurrencies, the earlier Ghana legalizes and regulates it, the greater benefit the country will derive from the emergence of this technology.