The Economic Organization of West African States (ECOWAS) has issued a warning against the use and adoption of cryptocurrencies. In a report released by ECOWAS congress, the African organization brought to the fore the risks inherent in the usage of digital currencies and warned that the risks are too critical to overlook. One major risk the report highlighted is volatility.
The legislative body’s warning was issued after a joint committee meeting in Burkina Faso’s capital city, Ouagadougou. ECOWAS had held the meeting to deliberate on the prospects of cryptocurrency as a means for encouraging investment. However, the meeting ended with a resolve by the body that cryptocurrencies posed too many risks. Although the Congress admitted that crypto assets can suffice as a means of exchange, they can still be rejected by users as there are no existing regulations backing their usage. Thus, users will be under no obligation to do so or be flouting any law
Cryptocurrencies Not Same as E-cash, says Congress
Interestingly, the congress made a comparison between crypto assets and electronic cash, saying they are not in the same category as cryptocurrencies are notorious for their unstable nature. It said the unstable nature of cryptocurrencies results from their limited supply which then promotes speculation.
The congress also highlighted other dangers of cryptocurrency usage such as how unrecoverable they are once they have been sent. For instance, if a person realizes he made a mistake while sending the asset, he or she would not be able to reverse it unless the recipient does so himself. Other dangers according to the congress are as follows; the absence of a central body to regulate their circulation, issuance or transactions and lastly, a large amount of a crypto asset could be concentrated on the hands of a few persons, thereby posing more risks.
Cryptocurrency Adoption Becoming Widespread Despite Congress’ Position
Despite the disposition of the ECOWAS congress, cryptocurrency adoption is becoming widespread in Africa, especially in countries like Nigeria. The West African country has seen a massive increase in the volume of P2P transactions since the central bank of Nigeria directed banks around the country to withdraw their services from crypto exchanges in February.
At the time, Nigerian crypto users criticized the policy, but eventually found a way around it. Since then, the frontiers of crypto adoption have expanded. Earlier this month, the CBN reiterated its plans to introduce a central bank digital currency as an alternative to cryptocurrencies. The proposed CBDC would give the Nigerian central bank more control as against crypto.
Meanwhile, the National Museum of Uganda partnered with a software development firm last month to deploy some artefacts in the museum on one of the various blockchains through tokenization or as non-fungible tokens. This is an indication that while the ECOWAS congress may dwell on the risks cryptocurrencies pose, there are numerous advantages that trump these risks. In a related development, the Ethiopian government collaborated with Charles Hoskinson’s Cardano on a project that would enable a teacher-student identification and grading system with the help of blockchain technology.
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