The Bank of Ghana (BoG) has cautioned the public to avoid patronising an impending launch of a cryptocurrency named ‘Freedom Coin’.
The apex bank said, “neither the cryptocurrency nor the promoting company has approval from the Bank of Ghana to operate in the banking and payment sector”.
This was contained in a statement dated 9 March 2022, which was signed by the Secretary of the BoG, Ms Sandra Thompson.
The BoG has advised the public to do business with licensed financial institutions also ensure to cross-check with the bank to verify its registration.
The country’s Securities and Exchange Commission (SEC) has also warned against cryptocurrencies.
The SEC does not regulate the cryptocurrency space in Ghana, and cryptocurrency is not accepted as legal tender either.
“In line with notice NO.BG/GOV/SEC/2018/02 issued on 22 January 2018, which can be found on the bank’s website, Bank of Ghana wishes to reiterate that cryptocurrencies such as Bitcoin are not regulated under any laws in Ghana and are therefore not backed by any guarantees or safeguards.
“Bank of Ghana advises the general public to exercise caution in respect of cryptocurrency transactions,” the BoG statement stressed.
The central bank further directed all licensed institutions, including banks, specialised deposit-taking institutions, dedicated electronic money issuers and payment service providers, to refrain from facilitating cryptocurrency transactions via their platforms or agent outlets.
The general public was advised to take note and be guided accordingly.
What are cryptocurrencies?
Cryptocurrencies, or virtual currencies, are digital means of exchange created and used by private individuals or groups.
Because most cryptocurrencies aren’t regulated by national governments, they’re considered alternative currencies – mediums of financial exchange that exist outside the bounds of state monetary policy.
Digital currencies are not recognised as legal tender in some jurisdictions, including Ghana.
But technology advancement and increasing global acceptance are compelling countries to have a second look.
Cryptocurrencies such as Bitcoin, Ethereum, Ripples, and Litecoin have gained global prominence since 2017.
In Ghana, the Securities and Exchange Commission says it is currently “focused and preoccupied with the financial sector clean-up exercise.”
In Africa, Mauritius, Angola, South Africa, Namibia, and Zimbabwe are some other African countries where cryptocurrencies are permissible. On the other hand, it is banned in Algeria, Egypt, and Morocco.
Globally, crypto-currencies are common in the US and also allowed within some countries within the European Union.
Japan, Hong Kong, and Korea are some countries in Asia where digital currencies are also legal.
History of crypto-currencies
In 1983, the American cryptographer David Chaum conceived an anonymous cryptographic electronic money called ecash.
Later, in 1995, he implemented it through Digicash, an early form of cryptographic electronic payments which required user software in order to withdraw notes from a bank and designate specific encrypted keys before it can be sent to a recipient.
This allowed the digital currency to be untraceable by the issuing bank, the government, or any third party.
In 1996, the National Security Agency published a paper entitled How to Make a Mint: the Cryptography of Anonymous Electronic Cash, describing a Cryptocurrency system, first publishing it in an MIT mailing list[9] and later in 1997, in The American Law Review (Vol. 46, Issue 4).
In 1998, Wei Dai published a description of “b-money”, characterised as an anonymous, distributed electronic cash system. Shortly thereafter, Nick Szabo described bit gold.
Like bitcoin and other cryptocurrencies that would follow it, bit gold (not to be confused with the later gold-based exchange, BitGold) was described as an electronic currency system that required users to complete a proof of work function with solutions being cryptographically put together and published.
According to an article by Forbes published in 2017, a paper called Bitcoin – A Peer to Peer Electronic Cash System was posted to a mailing list discussion on cryptography in 2008.
It was posted by someone calling themselves Satoshi Nakamoto, whose real identity remains a mystery to this day.