📌 Emerging Onchain This Week #21
This edition of EOTW brings us precarious & exciting news from Ethiopia, Kenya, South Africa and Nigeria.
We hope you have a great leap year week, as always, thank you for joining us on our journey of exploring emerging markets.
Know others who are looking to know more about the African crypto space? Well…
- The Central Bank of Nigeria (CBN) Plans to Shutdown Crypto Websites
The Nigerian government, CBN and the Office of the National Security Adviser are reportedly taking steps to shut down crypto websites in the country, by instructing telcos to block access to them. This comes as the CBN accuses them of fuelling the currency devaluations with the Naira hitting all-time lows of N1,800/$1. Binance, one of the biggest exchanges in Africa, specifically denied these allegations, stating its P2P marketplace is not intended for currency pricing.
Nigeria has had a rollercoaster relationship with crypto, most recently the CBN had issued a circular enabling TradFi to work with crypto companies again. This month, there have been reports of the government of Plateau state (Nigeria’s 12th largest state) and the Algorand Foundation, partnering to test blockchain applications across numerous sectors.
- Ethiopia to start bitcoin mining
Ethiopian Investment Holdings (EIH), Ethiopia’s government’s investment arm, has announced a $250million partnership with Hong Kong’s West Data Group’s Centre Service focusing on services including data and bitcoin mining
It is hoped that this move will attract foreign talent and also foreign exchange, charging international bitcoin mining companies a fixed price for the electricity they use in Ethiopia. Reports already show that the state-owned Ethiopian Electric Power has already secured partnerships with a number of Bitcoin mining companies
- Opera MiniPay helps surge DeFi Adoption with its 1 Million Users
The global web innovator Opera, announced Opera MiniPay's launch in September 2023. It has since seen a rapid adoption, reaching 1 million users in Kenya, Nigeria, and Ghana within five months. This milestone was set to be officially celebrated by MiniPay and its partners Celo and Mento Labs at the Africa Money and DeFi Summit, which took place in Nairobi, Kenya on February 14-15.
The growth of MiniPay is not surprising, as according to Bloomberg data on the 10 most devalued currencies of 2023, the Nigerian Naira ranked third with a 55% loss of value against the dollar, the Kenyan shilling was 10th with a -20% loss. The 5 other African countries on the list make it clear why MiniPay addressing the need for financial stability has received over 1 million users’ attention.
- South Africa to Explore Domestic Stablecoin Landscape
South Africa is considering making amendments to its Financial Intelligence Centre (FIC) Act, potentially requiring reporting of all crypto transactions over R49,999 ($2,650). The country's annual budget review of 2024, outlines strategies to promote digital payments, along with regulations for stablecoins and blockchain.
The National Treasury plans to publish policy adjustments regarding crypto assets, with a stablecoin focus, through the Intergovernmental Fintech Working Group (IFWG). The group’s crypto position paper of 2021 will be amended to include stablecoins and a diagnostic analysis of the domestic stablecoin landscape. Additionally, South Africa is partnering with Switzerland's State Secretariat for Economic Affairs and FinMark Trust for a 3-year initiative to conduct digital payment pilot projects.
- Kenya to Introduce New Crypto Regulation
The Kenyan Treasury had previously set up a working group focused on crypto advising. The working group is believed to be preparing a draft version of a policy document that according to the director general of the Financial Reporting Centre, provides “a legal framework which will prescribe what needs to be done and who will be the regulator for digital assets providers”.
In light of Kenya being placed on the FATF grey-list, reflecting their need to address “deficiencies in their regimes to counter money laundering, terrorist financing, and proliferation financing” and arguments that crypto fuels money laundering, this draft comes at an opportune time. Whilst Uganda was recently removed from the list, several other African and Asian countries have been recently added.
- Bitpowr reaches Profitability, looks to Expand into Asia
In the same month as it announced its integration with Avalanche, Arbitrum and the OP Stack which supports both Optimism and Base, Bitpowr announced that it surpassed $200million in transactions on its platform since January 2022.
Bitpowr provides blockchain infrastructure including wallet infrastructure and tokenisation services. It has shared that it is now profitable, currently processing over $20million in transactions per month. In an interview with TechCabal, founder Toby Oyetoke noted that their Asian clientele’s transactions surpassed their African counterparts. He cites this as a signal for a growing demand in the Asian market.
- Ethena Labs Raises $14 Million in Funding Round for USDe Stablecoin
Ethena Labs, the developer behind the Ethereum-based stablecoin USDe, has secured $14 million in a funding round, bringing its valuation to $300 million. Notable investors include Dragonfly and BitMEX founder Arthur Hayes' family office, Maelstrom. USDe, backed by derivatives, was publicly launched after a stealth launch in December, quickly amassing over $224 million in total value locked.
Ethena Labs shared that the idea was heavily inspired by Haye's “Dust to Crust” article. USDe is said to be backed by a long staked ETH position and a short ETH position, which could ensure dollar-denominated returns. With plans to expand its team, Ethena aims to hire quant engineers and business development executives in Asia, building on its current team of 12 based in Lisbon, Portugal.
- Japanese Government Advancing Economic Reform Bill
The Japanese government is proposing an economic reform bill that includes a provision allowing investment limited partnerships to acquire and hold crypto assets. This could potentially expand the use of crypto in institutional investment strategies. This move, published by Japan's Ministry of Economy, Trade and Industry, signifies a considerable shift in Japan's regulatory stance towards crypto.
Sota Watanabe, founder of Astar Network, views this inclusion of crypto assets as a crucial step for enriching Japan's national industry and addressing concerns raised by venture capitalists and startups. The bill now heads to Japan's national legislature for consideration, with the current session running until June 23, 2024.
2023 Top 10 Best & Worst Currency Performers Against the US Dollar
Bloomberg’s chart on the 10 best and worst performing currencies against the US dollar in 2023 shows a ‘best’ chart being made up of 30% South America and Europe respectively, 20% Middle East then 10% Asia and the Caribbean respectively. The ‘worst’ chart is made up of 70% Africa, 20% Middle East and 10% South America.
A non-exhaustive list of some of the useful and/or informative resources we are reading to catch up on the emerging trends affecting crypto globally and in Africa:
M^0 Protocol’s paper on “Introducing the Two Token Governor”, their public blockchain
Christian Nwobodo’s Bitcoin ETFs Overview
South Africa’s February 21st National Budget Review with a section in annexure E which talks on “Financial Innovation to Improve Competition and Inclusion”
Dr Ola Brown’s presentation on Structuralism and how it relates to inflation
The Blockchain Association along with Former U.S. Military and National Security Professionals pen a letter to warn against enacting proposed legislation that threatens digital asset development
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