Following the recent collapse of FTX and the subsequent ongoing prosecution of its former Chief Executive Officer, Sam Bankman-Fried, the International Monetary Fund has called for increased regulation of crypto markets in Africa.
IMF made this call on Thursday in its “October 2022 Regional Economic Outlook for sub-Saharan Africa”.
According to IMF, countries in the region should embrace regulation while citing the collapse of FTX and its ripple effect in cryptocurrency prices, which is “prompting renewed calls for greater consumer protection and regulation of the crypto industry”.
Moreover, the fund argued that “risks from crypto assets are evident” and “it’s time to regulate” to find a balance between minimising risk and maximising innovation.
The piece stated that “risks are much greater if crypto is adopted as legal tender,” posing a threat to public finances if governments accept crypto as payment.
“The collapse of the world’s third largest crypto exchange FTX, and subsequent plunge in the prices of Bitcoin, Ethereum, and other major crypto assets, is prompting renewed calls for more excellent consumer protection and regulation of the crypto industry.
“Regulating a highly volatile and decentralized system remains challenging for most governments, requiring a balance between minimising risk and maximising innovation. Only one-quarter of countries in sub-Saharan Africa formally regulate crypto,” the monetary fund stated.
According to IMF’s data, 25 per cent of countries in sub-Saharan Africa have formally regulated crypto, while two-thirds have implemented some restrictions.
It also explained that Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of Congo have placed the crypto market under a ban, representing 20 per cent of the sub-Saharan African countries. Kenya, Nigeria, and South Africa have the highest number of users in the region.
Between July 2020 and June 2021, Africa’s crypto market increased in value by more than 1,200 per cent, according to data from analytics firm Chainalysis, with high adoption in Kenya, South Africa, Nigeria and Tanzania.
Meanwhile, investors in the crypto industry have lost $116 billion to the bear market and the wave of bankruptcies that have engulfed the market in 2022, Forbes stated in its recent report.
Its report titled “These Crypto Founders And Bitcoin Moguls Lost $116 Billion In 2022”, which was released on Saturday, showed a combined personal equity of 17 people in the space, with over 15 losing more than half of their fortunes since March.
Consequently, industry observers believed the market bearish would last until the end of 2023.
According to Forbes, one of the major losses was attributed to Binance CEO Changpeng “CZ” Zhao.
In March, Zhao 70 per cent stake in the crypto exchange was valued at $65 billion, but it is now worth $4.5 billion.
Zhao was closely followed by Coinbase CEO Brian Armstrong whose net worth was estimated at $1.5 billion from $6 billion in March.
The fortune of Ripple’s co-founder, Chris Larsen, downed from $4.3 billion to $2.1 billion while Cameron and Tyler Winklevoss of Gemini were valued at $4 billion in March but were now worth $1.1 billion each, Forbes revealed.
Among those who lost the billionaire status are FTX co-founders Sam Bankman-Fried and Gary Wang, whose fortunes in March were valued at $24 billion and $5.9 billion, respectively, and at $0 in December.
The $3.2 billion fortune of Barry Silbert, founder, and CEO of Digital Currency Group, was also lost as a result of the contagious wave caused by the collapse of FTX, according to Forbes.
Among the former billionaires were also Nickel Viswanathan and Joseph Lay from crypto software firm Alchemy, Devin Finzer and Alex Atallah of OpenSea, Fred Ehrsam of Coinbase, MicroStrategy founder Michael Saylor and venture capitalist Tim Draper.