Bitcoin is the most popular cryptocurrency globally. Digital currencies
continue to gain more traction in East Africa. PHOTO | JENS KALAENE
The Bank of Tanzania (BoT) has warned the public to act with extreme caution when trading in cryptocurrencies.
The
central bank is among other East African regulators that have cautioned
citizens against the lure of digital currencies, which they say have no
legal backing.
The rise of prices of cryptocurrencies
prices, especially Bitcoin --the most popular digital currency
globally-- has made them appealing.
“BoT considers the
recent surge in the prices of cryptocurrencies to be driven by
speculation. The risk of a sharp reduction in prices is high. Investors
in cryptocurrencies should be aware that they run the risk of losing all
their capital,” said Abdul Dolla, BoT’s Assistant Manager, Safe Custody
Centre.
While Tanzania has not officially banned Bitcoin, the central bank does regulate cryptocurrency transactions.
Cryptocurrencies are digital monies that use cryptic algorithms for security and run on a complex code system called blockchain.
Cryptocurrency transactions are generally anonymous and are not subject to any government or central bank regulation.
This, the regulators warn, make them safe havens for money laundering, terrorism financing, tax evasion and fraud.
“BoT
notes that before investing in cryptocurrencies, members of the public
should carefully consider the claims being made about the products being
offered...if the touted ease of making significant profits sounds too
good to be true, it probably is,” Mr Dolla said.
Kenya and Uganda have both issued advisories against trading in cryptocurrencies.
Rwanda remains cautious about the risks involved and is yet to take an official position on cryptocurrency.
In
Africa, Algeria plans to issue a cryptocurrency ban while in Egypt, top
cleric grand mufti Shawki Allam in January endorsed Bitcoin trading ban
citing concerns about money laundering and terrorism funding.
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