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The Bank of Russia has endorsed the expedited integration of cryptocurrency for global transactions. Elvira Nabiullina, the bank’s governor, emphasized the necessity for these digital currency transactions to be initiated within a controlled, experimental framework, akin to a sandbox environment. Meanwhile, transactions involving sovereign digital currencies, also referred to as central bank digital currencies (CBDCs), are set to proceed without such experimental stipulations.
Russia advocates for a broader array of currencies and payment mechanisms in international dealings. Last week, Nabiullina announced the bank’s support for swift legislative progress to facilitate cryptocurrency transactions for global payments. Nevertheless, she insisted that these should commence within a sandbox-style legal framework.
Historically, the institution has resisted the domestic circulation and utilization of cryptocurrencies, citing national authorities’ lack of regulatory oversight. Nonetheless, it remains receptive to their application in international settlements.
Conversely, using national digital assets for international transactions is already under exploration without the sandbox testing phase. Olga Skorobogatova, the First Deputy Chairman of the Central Bank, reported that three business applications for trialing this method have already been received.
On March 11, President Vladimir Putin signed a law that regulated this particular application of CBDCs, assigning supervisory responsibilities to the Bank of Russia. This legislative action followed declarations from prominent Russian figures about the prospective development of a blockchain-based payment mechanism for BRICS, a consortium of nations including Brazil, India, China, South Africa, and several others. On March 27, Russian Finance Minister Anton Siluanov announced plans to discuss with central bank officials the permissible extent of cryptocurrency applications within the nation. However, not only Russia has been in the race for crypto adoption.
Kenyan Advocacy Group Advances Nation’s Premier Cryptocurrency Legislation to Legislative Body
In a similar move, the Blockchain Association of Kenya (BAK), a champion for digital asset policies, has introduced the inaugural bill for regulating Virtual Assets Service Providers (VASP) to Kenya’s legislative chambers. The proposal, aimed at overseeing the nation’s burgeoning digital asset sector, was first made available for public scrutiny on January 22, 2024, and has since sparked a spectrum of reactions from the local cryptocurrency community.
This legislative push follows a request from Kenya’s parliament three months prior. After their initial discussion on October 31, 2023, the parliament called on a civil society organization to draft the pioneering cryptocurrency legislation by February 14. The advocacy group had earlier approached the National Assembly’s Committee on Finance and National Planning in August 2023, voicing objections to the Digital Asset Tax (DAT) in the 2023 Finance Act.
Kenya holds the third-largest crypto economy in Africa, trailing only Nigeria and South Africa, according to a Chainalysis report covering transactions from July 2022 to June 2023. Globally, Kenya ranks 21st in cryptocurrency adoption. However, the digital asset sector in Kenya is not without its challenges, including fraud, high operational thresholds for new cryptocurrency enterprises, and stringent tax regulations, factors that threaten consumer safety.
The proposed bill is designed to fortify consumer protection by establishing a robust regulatory framework. It also suggests licensing mandates for operators within a regulatory experimental framework, including anti-money laundering and counter-terrorism financing measures to alleviate industry and regulatory apprehensions.
BAK has extended an invitation to stakeholders from Kenya and beyond to examine and critique the cryptocurrency bill. Today, February 7, 2024, marks the deadline for feedback. The advocacy group will utilize this input to refine their initial draft and plan to present an updated version to the National Assembly’s Departmental Committee on Finance and National Planning on February 14.
Michael Kimani, the Founder and Chairman of BAK, highlighted the bill’s potential to elevate Kenya to a global digital asset nexus, comparable to established hubs like Singapore and Dubai.
South Africa’s Cryptocurrency Sector as Licensing Approaches
South Africa has also been taking steps to adopt crypto. Late last year, a proliferation of payment corporations and financial technology enterprises spearheaded this initiative, and there is a strong indication that major banking institutions will soon join the fray.
Among the newly introduced services is a feature that permits consumers to procure goods and services using cryptocurrency. At the same time, another facilitates the conversion of digital currency into tangible cash at automatic banking machines. A notable development is from Stitch, a local payment infrastructure firm, which has unveiled a novel transaction method termed “Pay with Crypto.” This system allows customers to transact using cryptocurrency when acquiring goods and services, denominated in South African rand. Patrons of this service have the option to either deposit or complete purchases directly using their digital currency.
“Cryptocurrency utilization in South Africa ranks among the highest globally. A considerable demographic shows a preference for employing their digital currencies for transactions,” remarked Junaid Dadan, President of Stitch.
Dadan further expressed, “We are thrilled to provide our clientele the means to engage and cater to this segment, mitigating direct market fluctuation risks through our ’Pay with Crypto’ system.” Another fintech entity in South Africa, Paycorp, has introduced an application called CryptoExpress. This allows individuals to transform their digital currency into cash in South African rands at over 3,000 cash dispensers nationwide.
This application integrates smoothly with various cryptocurrency wallets, enabling withdrawals at specific ATMs managed by Paycorp’s subsidiary, ATM Solutions.
Steven Kark, CEO of Paycorp Group, asserted, “Our steadfast commitment to enhancing financial accessibility in South Africa is further demonstrated by the launch of the CryptoExpress app, which supports cardless cash withdrawals from digital wallets at our Cash Express ATMs, coupled with our ongoing Smart ATM deployment.”
In early December, the Financial Sector Conduct Authority (FSCA) of South Africa disclosed that it had concluded evaluations of 36 companies from an initial pool of 74. These firms are poised for review by the Licensing Executive Committee. Another batch of 22 will be considered in February, with the final 14 slated for March review.
As regulations evolve, South African authorities mandate that cryptocurrency firms with headquarters abroad establish a local presence to ensure better oversight and accountability.