Ethiopia Bans Digital Currencies, Warns Citizens Against Engaging In Illegal Transactions

Ethiopia Bans Digital Currencies, Warns Citizens Against Engaging In Illegal Transactions

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Ethiopia’s Central Bank has cracked the whip on digital currencies, releasing a statement terming cryptocurrencies such as bitcoin as illegal and prohibiting the use of any other currency except the Birr for all transactions within the country. It also encouraged its citizens to keep an eye out and report any illegal crypto transactions to the relevant authorities. 

Not As Welcoming As the Central African Republic 

Ethiopia’s central bank, the National Bank of Ethiopia (NBE), released a statement calling cryptocurrencies such as bitcoin illegal and prohibiting the use of any currency other than the Birr for financial transactions. Ethiopia’s move to ban the use of cryptocurrencies comes after its western neighbor, the Central African Republic (CAR), moved to embrace bitcoin, giving it the designation of legal tender, sparking significant concern from the International Monetary Fund (IMF). 

The bank, in its statement released to the state-affiliated Fana Broadcasting Corporate, reiterated the status of the Birr, stating,

“Ethiopia’s national currency is the Ethiopian Birr, with any financial transaction in Ethiopia to be paid in Birrs, according to the law.” 

Potential For Corruption And Money Laundering 

Despite its stance against bitcoin and other cryptocurrencies, the National Bank of Ethiopia acknowledged the growth of bitcoin and its use in the country. However, it reiterated the fact that it had never granted citizens permission to use bitcoin or other cryptocurrencies for transactions. It also cautioned citizens against using cryptocurrencies, warning them about the consequences of doing so. 

According to several reports, the bank’s negative stance against cryptocurrencies is because it believes they are being used to conduct illegal activities and launder money in the country. 

Citizens Not Too Pleased 

However, citizens were not too pleased with the developments, protesting that not all users use digital currencies for illegal activities. A Twitter user summed up the sentiment in a tweet, 

“Why this Happening in Ethiopia it Supposed to Approve Crypto Currencies & Legitimate Digital Currencies To Fully Functionable in Ethiopia, Not All Users use it for corruptions.”

The announcement came soon after Octagon Networks, a cybersecurity firm based in Addis Ababa, converted all of its liquid assets to bitcoin. 

Cardano Hoping To Establish Payments Network 

Meanwhile, Cardano is hoping it can pioneer its payments network in Ethiopia. The government had announced an initiative in 2021 with Input-Output Global to create decentralized IDs for students and teachers. Input-Output Global recently announced that it was ready to implement the initiative, which would benefit up to 1-2 million students and teachers. Cardano hopes to create a payments network in Ethiopia before covering the entire African continent. 

Adoption At All-Time High In Africa 

Despite a fragmented approach by governments in the African continent, crypto adoption remains at an all-time high. Apart from the Central African Republic embracing bitcoin, we have seen others, such as Cameroon, the Democratic-Republic of the Congo, and the Republic of Congo, hold talks with the TON Foundation to launch localized stablecoins. 

“We’re not attempting to replace a national currency, and we’re not aiming to do a CBDC, which is obviously run by a central bank.”

The pivot to crypto comes after decades of socio-economic problems, poor governance, civil wars, and decades of neglect.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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