Ghana Legalizes Crypto to Capture a Shadow Economy Worth Billions
Ghana’s parliament has officially approved a new law legalizing the usage of cryptocurrencies.
First reported by Bloomberg, the government passed the Virtual Asset Service Providers Bill late last week. With the new bill, crypto platforms will be supervised and licensed. Through regulation, parliament predicts that there will be “lower costs for banks,” better “customer experience” and more “support for small and medium-sized enterprises and traders.”
With the new bill, officials are also expecting an increase in intra-African trade. Per the Crypto Council for Innovation, over 17% of Ghana’s population use crypto in transactions, totaling up to about 3 million citizens. From July 2023 to June 2024, it is estimated that $3 billion was generated through cryptocurrency transactions, according to the chief executive officer of Web3 Africa Group, Del Titus Bawuah.
Overall, Sub-Saharan African countries are estimated to make up over $205 billion in cryptocurrency transactions. Nigeria alone is estimated to have recorded $59 billion in cryptocurrency transactions from July 2023 to June 2024.
“We are actually late in the game,” said Bank of Ghana Governor Johnson Asiama, per AfroTech. “Many of the country’s economic agents make and receive payments in cryptocurrencies, but they are not being captured in the nation’s financial accounts because of the absence of regulatory oversight.”
The implementation of cryptocurrencies into the global economy has drawn both support and criticism.
According to Brookings, there are various concerns associated with investing in crypto, beginning with the environmental impact. To process bitcoins, an astronomical amount of energy is required. Per reports, a 34-large-scale bitcoin mine used more energy than the 3 million homes surrounding it, as the computers run nonstop to process transactions.
In places such as Texas, the presence of just 10 bitcoin mines led to a 5% increase in energy bills, adding a total annual cost of $1.8 billion to local residents' energy bills. Crypto has also been associated with an alarming rate of water usage and potential contamination of water supplies.
Other physical impacts include increased noise pollution and reported health issues believed to be linked to bitcoin mining. These health issues include chest pains, hearing loss, ear infections, vertigo, migraines, hypertension and heart palpitations.
Along with environmental and physical concerns, Brookings highlighted the potential for unchecked financial risks associated with investments, as well as the rise of crypto ATM scams.
For supporters, however, of the digital currency, they emphasize the high returns and decentralized nature of crypto, giving more control to developers. Crypto has also been associated with cheaper and faster transactions.
Under the latest law, officials in Ghana are establishing a new legal framework for the central bank to oversee companies operating in the crypto sector. They join Kenya as one of two African nations that passed legislation to regulate crypto this year.