Tanzania central bank says it is working on president’s cryptocurrency push

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FILE PHOTO: Illustration of Bitcoin
FILE PHOTO: A representation of the virtual cryptocurrency Bitcoin is seen in this picture illustration taken June 14, 2021. REUTERS/Edgar Su/Illustration

June 25, 2021

By Nuzulack Dausen

DAR ES SALAAM (Reuters) – Tanzania’s central bank has said it is working on President Samia Suluhu Hassan’s directive to prepare for cryptocurrencies, pointing to a possible reversal of a ban it put in place in 2019.

The new president, who came to power after the death of her predecessor in March, said this month the arrival of digital currencies in the East Africa nation was inevitable.

“In the financial sector, we have witnessed the emergence of blockchain technology or cryptocurrency,” Hassan said during the opening a new central bank branch in the northern town of Mwanza this month.

“Many countries in the world have not accepted or started using these currencies. However, I would like to advise the central bank to start working on those issues. Just be prepared.”

Her comments made shortly after El Salvador became the first country in the world to adopt bitcoin as a legal tender, prompted fresh debate over the role of cryptocurrencies in economies and remittance transfers.

Tanzania’s central bank banned cryptocurrencies in November 2019, saying they were not recognized by local law, but it now says it is adapting following the president’s comments.

“The bank is working on the directives given,” a Bank of Tanzania spokesperson told Reuters this week, declining to give further detail.

GRADUAL PREPARATIONS

The spokesperson did not respond to questions on whether the bank plans to adopt existing cryptocurrencies such as bitcoin, or was looking to issue its own digital currency as China has done.

Hassan’s comments reflect her much more open attitude to foreign investment, a shift from the stance of her predecessor John Magufuli, who tussled with foreign gold miners and even locked horns with neighboring Kenya over access to the market.

Tanzania Bankers’ Association chairman Abdulmajid Nsekela welcomed Hassan’s push, for the $63 billion economy still relies heavily on cash transactions.

“The most challenging element for regulators is to be caught by surprise by innovations,” he said. Gradual preparations would help the central bank assess the risks and come up with ways of addressing them in advance, he added.

Analysts warned that progress might be slow.

“The change in tone from Tanzania’s president is clear, but wait to see whether the central bank will take concrete steps towards embracing cryptocurrencies,” said Faith Mwangi, an analyst at Tellimer.

Mwangi pointed to Uganda, where President Yoweri Museveni made similar comments back in 2017, but the central bank has yet to rescind its ban on cryptocurrencies.

(Reporting by Nuzulack Dausen in Dar es Salaam and Duncan Miriri in Nairobi; Additional reporting by Omar Mohammed; Writing by Duncan Miriri; Editing by Karin Strohecker and Andrew Heavens)