Crypto Adoption Highest in Kenya, UNCTAD Warns of Financial Risks
A new report from the United Nations Conference on Trade and Development (UNCTAD) shows Kenya’s digital currency ownership as a share of the population of 8.5% is the highest in Africa and the fifth-highest across the globe. The UNCTAD further notes that holding cryptocurrencies is a financial risk and recommends imposition of taxes to discourage crypto trading.
Besting Kenya are Ukraine with 12.7%, Russia (11.9%), Venezuela (10.3%), and Singapore (9.4%) who all have a higher proportion of crypto-owning residents than Kenya.
In Nigeria, notably one of the biggest cryptocurrency markets globally and lauded for its crypto adoption, 6.3% of the population own or hold cryptocurrencies. With a population of 211 million people, this means roughly 13 million were holding cryptocurrency in 2021.
Of the 20 countries that were surveyed, with 3.4% Australia showed the smallest adoption of citizens owning cryptocurrencies.
Explaining the popularity of cryptocurrencies, UNCTAD notes that they are “an attractive channel through which to send remittances.” The UN report also stressed that for inflation-hit developing countries, crypto are considered “as a way to protect household savings.”
The returns from cryptocurrency trading and holding are, as with other speculative trades, highly individual. On balance, they are overshadowed by the risks and costs they pose in developing countries. There are several reasons to be cautious.
UNCTAD also acknowledged risks with the use of digital assets and notes that “the use of cryptocurrencies may lead to financial instability risks.” In addition, it potentially opens “a new channel for illicit financial flows.” The report detailed:
“Finally, if left unchecked, cryptocurrencies may become a widespread means of payment and even replace domestic currencies unofficially [a process called cryptoization], which could jeopardize the monetary sovereignty of countries. The use of stablecoins poses the greatest risks in developing countries with unmet demand for reserve currencies.”
UNCTAD makes some recommendations to mitigate risks. Iit recommends “mandatory registration of crypto-exchanges and digital wallets” and “entry fees for crypto-exchanges” or imposing taxes on cryptocurrency trading. UNCTAD also recommends tighter restrictions on cryptocurrency advertisements and issuing of a central bank digital currency (CBDC).
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Source: igaming
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