Ethiopia’s Central Bank Issues Warning Against Crypto Use.
Ethiopia’s Central Bank has denounced crypto and digital currencies as a form of payment in the country.
The National Bank of Ethiopia has issued a statement prohibiting the use of any other currency except the Ethiopian Birr for all transactions along with a warning that bitcoin and other digital currencies are illegal.
In a statement to the state-affiliated news outlet, Fana Broadcasting Corporation, the bank said, “Ethiopia’s national currency is the Ethiopian Birr, with any financial transaction in Ethiopia to be paid in Birrs, according to the law.”
Much as the Bank recognizes the growth of bitcoin use in Ethiopia, it warns about negative consequences for citizens who use cryptocurrencies for payments and transactions as it insists it has never authorized any such use.
Fana Broadcasting Corporation reported that the NBE adopted this stance because it believes that digital currencies are being used to conduct informal financial activities and money laundering in the country.
The timing of the announcement may worry critics as it comes shortly after cybersecurity firm Octagon Networks which has a base of operation in Addis Ababa announced that it had converted all its liquid assets to bitcoin.
The news was met with mixed reactions and a Twitter user claiming to be from the Financial Services sector in Ethiopia tagged Ethiopian Prime Minister, Abiy Ahmed Ali in a tweet saying,
“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 Ethiopian Government has an ongoing initiative with Input-Output Global (the company responsible for the Cardano blockchain) that started in April 2021 aimed at creating decentralized digital student and teacher IDs.
As of 3 weeks ago, Input-Output Global announced that it was ready for the rollout that would initially see 1 to 2 million students and teachers benefitting on the way to the target of 5 million students, and 750,000 teachers.
Cardano’s ultimate goal is to establish a payment network in Ethiopia before expanding to the rest of the African continent.
Africa is still divided on its approach to digital currencies. Many countries have taken the cautionary approach of banning cryptocurrencies and are only seen to revisit their position once a viable government alternative (Central Bank Digital Currency) or oversight protocols such as sandboxes are put in place.
The National Bank of Ethiopia also warned that it will take serious legal measures against anyone that is found using cryptocurrencies and urged citizens to report any illegal transactions to Ethiopian authorities.