2020 has seen an acceleration in African crypto adoption, with the continent emerging as the second-largest region for peer-to-peer (P2P) trading, and ii African nations ranking in the top eight of the Chainalysis crypto adoption alphabetize.

However, the booming growth has defenseless the attention of Africa's financial regulators, sparking concerns that a rush to introduce heavy-handed oversight could quell innovation in the local crypto industry.

Nigeria has led the continent's growth in 2022, posting weekly P2P volumes of between $5 one thousand thousand to $10 million, followed by Kenya and South Africa with between $1 one thousand thousand and $2 million a calendar week each.

Speaking to Cointelegraph, a representative of top P2P substitution Paxful stated that Africa has been its strongest growing region in 2022, noting there was also dramatic growth in smaller economies like Ghana, and Cameroon.

Centralized exchanges have also reported a spike in trade activity, with Luno reporting $549 1000000 worth of combined book from Nigerian and South African customers last calendar month — a 49% increase compared to the commencement of 2022. The exchange also notes that new customer sign-ups have increased by 122% from the fourth quarter of 2022 until Q2 of 2022.

Marius Reitz, Luno'due south general manager for Africa, told business publication Quartz that the increasing demand for crypto is being driven by the benefits that virtual currency offers over the notoriously sectional local banking sector.

Reitz notes that crypto assets are seeing increasing popularity amidst Africa's big community of workers who live away from their dwelling house countries, with the steep fees on foreign exchange across the continent driving these migrants to explore crypto assets.

"The demand we see now is a outcome of the challenges that people feel across Africa."

Lagos-based BuyCoins exchange has likewise noticed growth in "people trying to motion coin in and out of the country" with the commutation hosting $110 million in crypto volume this year, up from $28 meg during the entirety of 2022.

However, the increasing popularity of crypto has also brought greater regulatory scrutiny — with African lawmakers analysts appearing divided on how to best reply to the crypto phenomenon.

In Apr, South African regulators proposed regulations that would impose strict licensing and monitoring requirements but practice non recognizeng crypto avails every bit legal tender. Concluding calendar week, Nigeria'due south Securities and Exchange Commission (SEC) proposed guidelines that would care for all crypto assets similar securities past default.

Stephany Zoo of the Kenya-based exchange Bitpesa welcomed the consumer protections that will come from increased regulation. "Information technology is of import that the space is regulated and properly guided by the fiscal authorities to ensure confidence and protection of the consumer," he said.

But Reitz warned that hasty, heavy-handed regulation could crush innovation within the sector:

"What we'd similar to encounter is a phased approach. It can exist very easy for regulators to want to regulate the entire manufacture from the onset but it could stifle innovation. Once governments regulate better, in that location'southward more than chance of opening up integration with traditional financial infrastructure and in that location would be more mass adoption every bit well."