For the global cryptocurrency business, 2021 will be remembered as one of the numerous years in which bitcoin surpassed its all-time high price and pushed the industry even closer to mainstream adoption. However, it is probably the year in which Africa grabbed center stage from a regional standpoint.

It’s difficult to navigate any of the key conversations surrounding the sector without mentioning activities on the continent, from a reported 1,200 percent increase in crypto adoption to the launch of Africa’s first central bank digital currency and the Central Bank of Nigeria’s circular on cryptocurrencies.

As we begin the new year, Marius Reitz, Luno’s General Manager for Africa, examines three significant factors that will affect the continent this year:

Rethinking Regulation

It would be an understatement to say that the regulation of Africa’s crypto business in 2021 was eventful. Last year, the continent’s largest economies took a more proactive approach to consumer protection, with one technique in particular gaining traction: blanket prohibitions. The consequences have been far from ideal for countries that have implemented these restrictions, with trade activity being pushed underground and authorities having a diminished amount of visibility of the industry.

With this in mind, we may see a greater willingness on the part of regulators to collaborate with industry actors to create a stronger and successful framework, which may encourage other African countries to follow suit. Blanket bans, as we’ve seen in China, do little to limit trading activity and safeguard consumers, but bringing in specialists who understand the complexities of new and complicated technologies like cryptocurrency can provide a wealth of information on how to protect consumers from its risks.

Kenya’s emergence

With Nigeria’s crypto prohibition dominating headlines in 2021, one notable development on the continent that may have gone unnoticed was Kenya’s classification as the world leader in P2P trading volumes for the second year in a row. With a rapidly growing crop of companies building blockchain-based solutions, the country’s crypto industry is booming, and given its young population, high levels of mobile connectivity, and familiarity with digital payment solutions like mobile money, it’s well positioned to become East Africa’s leading crypto hub by 2022.

However, the need of widespread crypto education cannot be overstated if any substantial progress in terms of mainstream adoption is to be accomplished. According to Luno’s 2021 consumer research survey, 64 percent of Kenyans do not invest in cryptocurrencies because they do not understand them. Given that Kenyans are also the most proactive in seeking financial advice from traditional sources (i.e. financial services companies, publications, and advisors) before making investment decisions, it is critical that crypto firms go above and beyond to ensure the right information is readily available.

A new solution to Africa’s remittances problem

It is no secret that investments are now the most common use case for cryptocurrencies in Africa; nevertheless, remittances could see a significant increase this year. According to the World Bank, total remittances in Sub-Saharan Africa alone exceeded $45 billion in 2021. However, with a severe lack of foreign currency reserves across Africa preventing companies from receiving international payments and remitting profits, many businesses may turn to cryptocurrencies as a substitute for handling cross-border transactions.

The open and decentralized blockchain networks that support cryptocurrencies are the primary strength in this sector, as they allow money to be quickly exchanged between parties without lag times or prohibitive costs, regardless of who or where they are. Progress in this area, like most aspects of the crypto economy, will be strongly reliant on a favorable regulatory climate, and if this occurs, cryptocurrencies might become a big asset for corporations with extensive operations across Africa.

Expect the Unexpected

Despite the enormous impact that advancements in the three areas indicated will have over the next year, they are far from the only ones to watch. Institutional investment into Africa’s crypto space, for example, remains a big challenge; but, more established nations on the continent, such as South Africa, may introduce better regulatory frameworks to promote more participation from these players.

As the industry expands in prominence, it attracts top talent as well as the attention of leading media outlets, which are devoting more resources to excellent reporting, and both of these trends are expected to continue. However, if the events of the last two years have taught us anything, it is to expect the unexpected. While this can often lead to uncertainty, a quick look at Africa’s current position and prospects should still inspire great confidence that it remains the most promising region for cryptocurrency adoption.