A regional economic organization for West African states has voiced its concerns over digital currencies, particularly in terms of volatility. The Economic Community of West African States (ECOWAS) pointed to the recent volatility in the BTC price as a stark reminder that digital currencies aren’t a good store of value.
ECOWAS is a political and economic union of 15 West African states, among them Nigeria, Senegal, Ghana, Côte d’Ivoire and Burkina Faso. Combined, the members have a population of over 350 million and a GDP of close to $700 billion.
In a recent meeting of the Joint Committee of the ECOWAS Parliament, digital currencies took center stage. According to a report by Nigerian outlet Leadership, the meeting also involved digital currency experts and other stakeholders.
The Committee recognized the role that digital currencies are playing in facilitating investment in the region. However, it believes that there are many dangers that digital currencies pose which must be attended to before they go mainstream.
“The sharp decline in the value of BTC over recent weeks is a reminder for all that cryptocurrencies are not safe assets hence the use of cryptocurrencies on the African continent is not without danger for several reasons,” the committee stated.
On the use of digital currencies for day-to-day transactions, ECOWAS believes that “they are not a means of payment and cannot be likened to e-cash.”
The Joint Committee further attacked the use of digital currencies in crime, echoing the views of a rising number of leaders across the globe, from U.S. Treasury Secretary Janet Yellen to ECB’s Fabio Panetta.
Aside from being used in crime, the committee views digital currencies as being prone to attacks by cyber criminals. “…Therefore, cryptocurrencies enthusiasts need to guard against the risk of theft because if the cryptocurrency is by nature inviolable, portfolios, on the other hand, are not,” it cautioned.
As with many other authorities, ECOWAS is also concerned about the lack of definite regulations to govern the industry. This has led to a fragmented approach by regulators in the region, with some like Nigeria taking a tough stance against the industry.
This lack of regulations has made the industry easy prey for money launderers and other criminals.
Nigeria continues to be the leader in digital currencies in the ECOWAS region. While the central bank has taken an anti-digital currencies stance by prohibiting banks from serving the industry, this has done little to hinder its growth.
Speaking to CoinGeek about the rise of digital currencies in Nigeria, Praveen Kumar, who’s the CEO of Belfrics exchange stated, “The lack of availability of dollars from the banks, limited capability to do foreign remittance and lack of income streams have accelerated the growth of the digital currency industry in Nigeria.”