As someone who has experienced the transformative power of blockchain technology on the continent, I can attest to its potential. I’m Thabo, and I’ve been on a mission to democratize access to DeFi and NFTs to all Africans. From helping farmers access fairer prices for their crops to empowering artists to connect directly with their fans, I've witnessed how crypto can unlock opportunities in ways traditional finance simply can't. Like many in the crypto industry, I’m deeply troubled that Serbia would enact a surprise 15% CGT on crypto assets. You want to be concerned about it too! As it’s not only the case of Serbia, it is the prospective ripple effect on Africa’s burgeoning blockchain ecosystem that has us concerned.

Will Africa Follow Serbia's Lead?

Now imagine our young entrepreneur in Nigeria who has just completed university. They are in the process of developing a decentralized application focused on using microloans to serve small businesses. Crypto has become her financial lifeline, providing an alternative to predatory payday lending schemes. Now, imagine her being slapped with a 15% tax on every sale she makes. Then, overnight, her innovative project goes from being pretty darn feasible to highly unfeasible. That’s the world Serbia’s crypto tax imposes, and it’s a world we must keep from gaining a foothold in Africa.

Many African nations are at a crossroads. Are they committed to realizing the promise of crypto to promote financial inclusion and economic growth on a global scale? Or do they quench innovation with one-size-fits-all, heavy-handed regulations copying rules from developed countries that don’t understand our distinct challenges? Serbia’s state policy on crypto is to raise revenues and control the crypto market. It has the unfortunate potential to provide a template for African governments to shut down growing crypto ecosystems as they get the chance to develop.

At the same time, we cannot gloss over the peculiar challenges of African countries. Individuals experience unprecedented barriers to in-person financial services and record-high levels of financial exclusion. Yet there is a pressing demand for fresh ideas to solve these problems. Overly broad, repressive crypto regulations would only aggravate these issues, driving more into the shadows and harming the economy at large.

Stifling Innovation Before It Starts

Think about it: a 15% tax might be manageable in a developed economy with established financial infrastructure. Margins are razor-thin in Africa and access to capital is extremely limited. Because of the way this tax is designed, it can be absolutely crippling to most businesses. It disincentivizes investment, discourages innovation, and ultimately harms the very people who would otherwise benefit most from crypto’s potential.

The good news is that far more positive examples of crypto’s impact already exist. Cross-border payments become faster and cheaper, allowing people to avoid exorbitant remittance fees. Small businesses find it easier to get credit on these new, decentralized lending platforms. Blockchain can help farmers track their produce to know they are receiving their fair price. Through web3, artists have the opportunity to sell directly to their collectors, removing middlemen and reestablishing their creative independence. From these three examples it is clear that crypto is doing some powerful and positive things in Africa. We are in danger of losing these promising new avenues if we don’t prevent really bad rules from gaining traction.

A Call for a Balanced Approach

Africa requires a fresh, fairer deal. Taken collectively, this approach to regulation should encourage innovation, protect investors, and deter bad actors from going underground. African governments need to stop simply imitating policies from elsewhere. They must consider new regulatory paradigms that take into account the adaptability required by our complex world.

  • Regulatory sandboxes: Allow crypto businesses to test innovative products and services in a controlled environment, without being subject to the full weight of regulations.
  • Tiered licensing systems: Offer different levels of licensing based on the size and risk profile of the business, making it easier for small startups to comply.
  • Collaboration and Dialogue: Foster open dialogue between governments, crypto businesses, and community leaders to develop effective and inclusive regulations.

We need to be proactive. We must urge our governments to resist the temptation to blindly adopt policies like Serbia's and instead embrace a more forward-thinking approach that recognizes the transformative potential of crypto for Africa's future. Let's work together to ensure that Africa doesn't miss out on the blockchain revolution. Support crypto regs that put people first and show your support today! Together, let’s create a future where crypto makes possible the dreams of millions of people on the continent, not undermines them.