Study on cryptocurrencies and crypto-assets in Eastern Africa

Abstract

A currency is defined as a medium of exchange for goods and services. In other words, it serves as a means of payment, a store of value, and a unit of account. It is generally issued by a government, circulated within its jurisdiction, and accepted as official means of payment in the country of issuance. From the barter economy to the current modern economy, the currency has significantly evolved. In a barter economy, there was no physical currency. The payment for any traded goods and services was done with physical exchange with other types of goods and services. Over the past decades, electronic forms of payments have gradually replaced physical or hard currencies. The development of technology with electronic payments combined with the lack of confidence in the financial system following the 2008-2009 financial crisis has pushed for a new form of currency called cryptocurrency or virtual currency. The increasing use of cryptocurrencies, which are mostly unregulated private assets out of the control of governments and central banks, poses some issues, risks, and threats to the economy and the stability of the global financial system. After the introduction of the report, the first part will focus on some definitions and generalities of cryptocurrencies and crypto assets as well as the evolution of cryptocurrencies worldwide. The second part will review and analyses the current state of cryptocurrencies in Eastern Africa, where conditions, opportunities, and challenges of cryptocurrency implementation in the region will be discussed. The last part will conclude the report by providing policy recommendations.