National Bank of Ethiopia kicks against cryptocurrencies and proclaims all transactions be done using the Birr.
As the wave of crypto adoption sweeps across Africa due to rising inflation and weak economies, several monetary bodies have kicked against it. While citizens of various African countries turn to Bitcoin to hedge themselves against global headwinds, their governments seem adamant about preventing its use. The latest country to see opposition to Bitcoin adoption is east African country Ethiopia.
NEB Says Use OF Digital Currencies Illegal
The National Bank of Ethiopia (NBE) has issued a proclamation stating that citizens must make all financial transactions using the Birr unless it explicitly permits. Local reports revealed that the apex bank also reiterated the illegality of Bitcoin’s use despite becoming increasingly prevalent.
Furthermore, the Bank stated it never granted approval for cryptocurrency use and warned that those who do so would face the consequences. It revealed that digital assets were creating a conducive atmosphere for large-scale money laundering while helping to conceal illegal money.
A senior journalist at the BBC, Farhan Jimale, reiterated the government’s stance about the prevalent use of Bitcoin despite laws against it. He tweeted,
Interestingly, no money transfers or other financial transactions may be done in Ethiopia without obtaining permission from the National Bank of Ethiopia. This is according to the Payment System Proclamation No. 718/2003. Therefore, the NBE urged the public to desist from the use of cryptocurrencies and report illegal transactions to the appropriate authorities.
It is worth noting that the NBE’s proclamation comes following Octagon Networks’ recent declaration. The Addis Ababa based cyber security firm stated that it had completed the conversion of its liquid assets and whole balance sheet into Bitcoin. It further said it would begin receiving Bitcoin payments while offering discounts to encourage digital assets adoption.
Despite opposing the use of cryptocurrencies for financial transaction, the Ethiopian government have turned to the technology for other purposes. It teamed up with Cardano in May 2021 to help streamline the country’s education system management and track student performance.
NBE Joins Siste Agencies In Opposing Bitcoin Adoption
The NBE is not the only apex bank in Africa to oppose the use of cryptocurrencies among the people under its jurisdiction. Following the Central Africa Republic’s decision to adopt Bitcoin as a legal tender, Central Africa’s regional banking regulator issued a reminder of its cryptocurrency ban.
The Banking Commission of Central Africa (COBAC) regulates the banking sector in the six-nation Economic and Monetary Community of Central Africa (CEMAC). It stated that the prohibition was meant to ensure financial stability.
Likewise, the Central Bank of Nigeria (CBN)has continued to denigrate Bitcoin while championing the use of the eNaira. Previously, Nigeria’s apex bank had taken a similar stance to the NBE by banning all banks from carrying out any crypto transaction. It fined several banks for flaunting this rule, thereby leading to a rise in peer-to-peer trading in the country. The Argentinian Central Bank has also made a similar declaration.
Meanwhile, the International Monetary Fund and the World Bank support these financial monitoring bodies. These two international bodies have vehemently opposed the adoption of Bitcoin as a legal tender and instead championed the use of central bank digital currencies (CBDCs).
Do you think the NBE’s declaration will deter the use of digital assets for financial transactions in Ethiopia? Let us know your thoughts in the comments below.
Chris is a crypto enthusiast and a firm believer in the blockchain’s ability to create a new financial paradigm. Through writing, Chris hopes to expose the intricacies of this disruptive technology and how it is beneficial to Africans and developing countries. He aims to give readers a rational and unbiased outlook of the industry by equipping them with the necessary information to make enlightened investment decisions.
