In June this year, Ethiopia’s central bank issued a statement saying that crypto business in the country is illegal. Less than three months later, the country seems to have reversed this decision, instead requiring cryptocurrency operators to register with the national cybersecurity agency—the Information Network Security Administration (INSA)—within 10 days.
This move by the government to acknowledge the industry is driven by a desire to be proactive in protecting citizens from crypto-related cybercrime.
“There is interest among individuals and entities in providing crypto services including mining and transfer,” INSA said, warning that crypto players who fail to register will be prosecuted even as the global crypto winter continues. On Aug. 28, Bitcoin plunged below $20,000 for the first time since July 14.
In June, INSA said it thwarted 97% of cyber-attacks attempted on various institutions in the country since July 2021, helping the country save $26.3 million.
While African countries acknowledge the rising threat of cyber insecurity in the continent, none has laid down measures to mitigate against cyber attacks hidden in online crypto marketplaces. Ethiopia wants to lead in this front.
And though a laggard in the adoption of crypto in Africa, Ethiopia is fast catching up with dominant players such as Nigeria, Kenya, South Africa, and Egypt. With 1.8 million Bitcoin traders, Ethiopia ranks seventh in Africa in crypto holding capacity.
Despite rising interest, crypto trade remains banned by most African governments save for the Central African Republic. In May, Uganda conducted a countrywide crackdown on payment providers facilitating crypto transactions, after 5,000 victims lost approximately $2.7 million though Ponzi schemes.
There have been tales of pain in Ethiopia’s southern neighbor Kenya as traders got burned in May. However, Ethiopian crypto traders keep exploring the business, and nine crypto exchanges have been selling them digital coins.
“Although it is argued that the blockchain is a more secure way of transacting, the downside, of course, is that if you lose your private key there’s no way to recover your funds,” Iwa Salami, an expert in fintech regulation told The Conversation.
The latest Chainalysis report indicates that losses arising from cryptocurrency scams rose by 60% in the first seven months of this year to $1.9 billion, propelled by a surge in funds stolen from decentralized finance (DeFi) protocols.
Once seen as impenetrable by hackers and ransomware groups, cryptocurrency platforms have become the target of cyber attacks as they are the preferred payment method for all types of scams, proceeds of theft and fraudulent transactions. FBI’s Internet Crime Report shows that criminal use of cryptocurrency sits among the top three reported cybercrime incidents in the world.