The increasing use of bitcoins in Africa has prompted a growing chorus of government officials, legal experts and e-commerce entrepreneurs to call for the virtual currency to be regulated.In Africa’s largest economy, Nigeria, outlets like leather goods site Minku are now accepting bitcoins.South African bitcoin exchange BitX , which also operates in Nigeria, recently partnered with mobile payment and smartcard company Zazoo to enable bitcoin use via the virtual prepaid MasterCard app, VCpay."Bitcoinsare becoming increasingly popular in Nigeria," said Victor Munis, a partner at international law and arbitration firm TRPLAW, via email."A good number of Nigerians are using bitcoins for their day-to-day transactions.Private companies sell bitcoins to interested persons.Retailers are beginning to accept bitcoins as payment for goods and services."TheCentral Bank of Nigeria, meanwhile, has indicated its intention to regulate bitcoin use in the country.The deputy governor of CBN’s Financial System Stability unit, Joseph Nnanna, told a recent financial community conference that regulating virtual currencies will protect customers and investors, maintain the stability of the financial system and deter the potential use of bitcoin for money laundering and terrorist financing.

The cloak of anonymity that bitcoin payments offer has made it useful to transact illegal business.moon bitcoin tricksFor example, the Silk Road underground online marketplace took payment in bitcoins.Munis agreed that regulating bitcoin transactions is necessary."Settingethereum dice siteup the appropriate regulatory framework will not only regulate its use but also give legitimacy to bitcoin transactions in Nigeria," Munis said, "The intention of the CBN to do so is a welcome development."Thoughethereum south koreaa growing number of Nigerians use bitcoins regularly to acquire items online, many are afraid to use it because of its instability."Volatilityethereum sponsors

does not inspire most of them to put their hard-earned money" into bitcoins, said Tim Akinbo, CEO of Nigeria-based TimbaObjects, which develops mobile and Web apps.reddit bitcoin paper walletThose who do use bitcoins tend to do so for quick transactions, to minimize risk from rapid fluctuations in the value of the virtual currency.The situation is however not unique to Nigeria, according to TRPLAW's Munis.gh/s bitcoin calculator"Another country which has a notable use of bitcoins is South Africa," Munis said.dogecoin community"There are a number of bitcoin exchanges there.litecoin live chartHowever, the South African Reserve Bank as well as its financial institutions are reluctant to accept bitcoin use.bitcoin-qt options

The situation may change in the future due to increasing use."AnotherBitcoin Africa Conference is scheduled for next March, following its inaugural edition in South Africa.The country also has a dedicated academy, the Bitcoin Academy, that offers courses on bitcoin basics as well as blockchain-based application development.The blockchain is a public database of transactions that can be modified by users.Regulation will "protect the consumer and weed out all the bad players" and "give businesses (and investors) a lot more clarity and confidence in what can be done in the space, which in turn will attract more capital and innovation to the sector," said the head of business development and growth at South Africa’s BitX, Werner van Rooyen, in email.Meanwhile, "all serious bitcoin companies (at least those who want to be around for more than the next few years) self-regulate by mirroring the KYC (know your customer) and AML (anti money laundering) set in place for other financial institutions," he said.Van Rooyan noted that BitX has already started to build a compliance framework, working closely with governments, regulators and financial institutions, focusing on adopting financial community best practices."We

encourage a pragmatic approach that aims to balance the innovative potential of the technology whilst mitigating the key risks," van Rooyan said."This allows businesses and startups the opportunity to grow, learn and explore the new terrain without overly burdensome regulation."Asan example of a practical approach, van Rooyan noted that some financial sector regulators adopt a "sandbox" approach, allowing regulation to kick in only once a certain size threshold -- such as number of users, or transaction volumes -- is met.He also suggested that the New York BitLicense Regulatory Framework and the now-dormant California Bitcoin Regulation Bill be studied for guidance.The California bill has been shelved, at least temporarily, but New York on Tuesday issued its first BitLicense.With Unicef now accepting virtual currencies as donations and Barclays becoming the first U.K.bank to help charities accept bitcoin payments, there is an increasing need to regulate virtual currencies in parts of Africa where these and other multinational organizations have strong networks.Banks across the world have been exploring bitcoin, trying to determine the potential uses for the digital currency and its underlying blockchain technology.

The move by Barclays, with operations in 14 countries across Africa, could bring bitcoin into the mainstream as the bank stated that it has the "potential to change financial services."Inaddition, a Commonwealth of Nations working group made up of Australia, Barbados, Kenya, Nigeria, Singapore and Tonga agreed after meeting International Monetary Fund and World Bank officials in London last month that virtual currencies could benefit member states and drive development.While recognizing that virtual currencies pose some risks, the group urged Commonweath members to "consider the applicability of their existing legal frameworks to virtual currencies and where appropriate they should consider adapting them or enacting new legislation to regulate virtual currencies."With18 African members, The Commonwealth Secretariat will create a digital repository of best practices and model regulations as part of an effort to assist members in developing policy.News law and legislation Virtual Currency Businessman’s Legal Battle Against BitLicense EnforcementThe New York State Legislature gave supervision and regulation authority to the New York Department of Financial Services, which requires virtual currency businesses operating within the state to have a BitLicense.

Virtual currency business owner Theo Chino commenced an action against the State, arguing that the DFS does not have the authority to enforce the BitLicense.Systems engineer Theo Chino is continuing his fight against a virtual currency regulation that was implemented by the New York Department of Financial Services (DFS), which requires a virtual currency business to obtain a “BitLicense” in order to operate within the state.On August 7, 2015, Chino submitted a BitLicense application.While it was pending, he realized the significant costs to run his business and commenced the lawsuit.On January 4, 2016, Chino’s application was returned without further proceeding because the DFS said it was “unable to evaluate whether [Chino’s] current or planned business activity would be considered Virtual Currency Business Activity that requires licensing under the Regulation.” Because he did not have a BitLicense, Chino was subsequently forced to abandon his business.As a preliminary issue, The DFS argues that Chino does not have standing to pursue this claim because his alleged injuries are too speculative and there is no “allegation that [Chino] is actually engaged in activity that would be covered by the Regulation.” Chino argues that he has sufficiently suffered irreparable harm because “it effectively forced him to close his Bitcoin processing business.” Whether or not Chino has sufficient standing will be the first step in determining the future of this case, as it is very unlikely to continue without first establishing justiciability.

Chino is relying on the New York Civil Practice Law Article 78 to sue the state over an administrative agency’s determination.He argues that the DFS does not have the authority to define virtual currency, but rather that it falls under the state legislature’s jurisdiction.Chino claims that the “Department acted beyond the scope of its authority because the [DFS] is only authorized to regulate ‘financial products and services’, but Bitcoin lacks the characteristic of a financial product or service, and, in the absence of an explicit legislative authorization the Department is not authorized to regulate it.” Further, the decision to deny his BitLicense application does not leave Chino with any further clarity as to what is required to successfully receive a BitLicense.The BitLicense application includes a lengthy list of requirements in addition to a $5,000 nonrefundable application fee.The BitLicense requires each licensee to maintain capital in the amount and form determined by New York’s Superintendent of Banking as well as “a surety bond or trust account in United States dollars for the benefit of its customers in such form and amount as is acceptable to the superintendent.” There is also no way to guarantee that a BitLicense will be issued, as the superintendent possesses significant discretion in approving applications based on whether they believe “the applicant’s business will be conducted honestly, fairly, equitably, carefully, and efficiently … and in a manner commanding the confidence and trust of the community.”  This subjective standard leaves virtual currency businesses with little recourse when their license applications are denied.

The DFS argues that it was tasked by the New York State Legislature to regulate and supervise financial services and products that include virtual currency, which is a “medium of exchange that may be used to buy or sell goods or services and can be used to store value.” The DFS states it has the authority to regulate various financial institutions, many of which involve virtual currencies: “Notwithstanding virtual currency’s early use as a means of making peer-to-peer payments, a variety of third-party service providers have become an integral part of virtual currency activity and … such third-party services are directly analogous to established financial services that are regulated under the Banking Law and the Financial Services Law.” A hearing on this matter will be set for May or June 2017.Further information is posted on Chino’s website, which includes various documents and resources related to the case.ETHNews is commited to its Editorial Policy Like what you read?