The International Monetary Fund (IMF) warned Africa about the risks brought on by its quickly mounting cryptocurrency adoption.

In a recent announcement, the IMF wrote that the recent collapse of major crypto exchange FTX and following crypto market crash “is prompting renewed calls for greater consumer protection and regulation.” The IMF pointed out that only one-quarter of sub-Saharan Africa countries have formally regulated cryptocurrencies.

Despite this, two-thirds have some restrictions in place and six countries — namely Cameroon, Ethiopia, Lesotho, Sierra Leone, Tanzania, and the Republic of Congo — have outright banned cryptocurrencies. Zimbabwe ordered all local banks to stop processing transactions related to cryptocurrencies and Liberia ordered a local crypto startup to cease operations.

Despite all of this hostility, the IMF points out that Africa is one of the fastest-growing cryptocurrency markets in the world despite being the smallest — with a peak monthly value of crypto transactions in the region of $20 billion registered last year. Kenya, Nigeria and South Africa lead Africa when it comes to the number of crypto users.

Most local crypto use is involved in commercial payments, but the IMF claims that their volatility makes them unsuitable as a store of value. The report notes that authorities are also afraid that cryptocurrencies negate their ability to limit capital outflows and regulate transactions headed outside the local territory. The paper also reads:

“Widespread use of crypto could also undermine the effectiveness of monetary policy, creating risks for financial and macroeconomic stability.”

The IMF further warns that the risks are further exacerbated if cryptocurrencies are adopted as legal tender like in the Central African Republic — or outside Africa also in El Salvador. The reasoning is that “if crypto assets are held or accepted by the government as means of payment, it could put public finances at risk.”

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