Zambia is nearing the end of its cryptocurrency regulation tests, which aim to create real-world simulations of crypto use to help the government shape its crypto laws.
The tests are set to finish by June, according to an April 12 Reuters interview with Zambia’s innovation, science, and technology minister, Felix Mutati.
The goal of these tests is to assist the government in finding a balance between innovation and safety for citizens when regulating cryptocurrencies.
Digital infrastructure necessary before crypto can be introduced
Mutati said that digital infrastructure, including digital identities, is necessary before cryptocurrencies can be introduced. He noted that the country’s main aim in the area of cryptocurrency is to strike a balance between digital payment innovation and citizens’ safety, especially given the volatility of cryptocurrencies.
Zambia’s cautious approach to cryptocurrency regulation is in contrast to the Central African Republic, which made Bitcoin legal tender and launched its own cryptocurrency token last year.
Other African countries, such as Nigeria, have also been cautious, with the country banning banks from handling crypto assets.
Zambia sees increased investment appetite
Mutati has said that there is an increased appetite to invest in Zambia. He added that the country needs to balance innovation and safety to ensure that citizens are protected.
The price of digital currencies plunged last year following the collapse of exchange FTX and other companies, but they have since recovered some of those losses this year.
Zambia faces several economic challenges, such as its long-delayed debt restructuring. The country was the first in Africa to default in the COVID-19 era in 2020 and could lose the gains it made from economic reforms if the restructuring of $18.6 billion of external debt is further delayed, according to the country’s Treasury secretary.
China holds the largest portion of Zambia’s external debt, with about $5.7 billion at the end of 2022, according to government data. Some Western officials have accused China of slowing down the restructuring process.
Chinese loans and projects in Zambia
Mutati said that the way Chinese loans were contracted during his tenure as finance minister between 2016 and 2018 depended on the project.
For example, he said that state power utility Zesco approached China’s Sinohydro about building the Kafue Lower Gorge hydropower project, which was funded by a $1 billion loan from the Export-Import Bank of China and Industrial and Commercial Bank of China.
Mutati added that the government initiated the new Lusaka international airport, while Chinese investors started the Chambishi economic zone.
Zambia’s cryptocurrency regulation tests are set to finish by June, and the results of these tests will be used to help the government shape crypto regulations.
Digital infrastructure, such as digital identities, is necessary before cryptocurrencies can be introduced. Despite facing economic challenges, such as its long-delayed debt restructuring, Zambia has seen an increased investment appetite. The country’s main goal in the area of cryptocurrency is to balance innovation and safety for citizens.
