Sudan Faces Challenges in Regulating Cryptocurrency Amid Growing Use for Financial Crime
Introduction
As cryptocurrencies continue to gain popularity worldwide, Sudan is grappling with the challenge of regulating this digital currency amidst concerns over its potential use for financial crime.
The Rise of Cryptocurrencies in Sudan
The country’s limited internet penetration and lack of a robust legal framework have created an environment ripe for the adoption of cryptocurrencies. According to Mohamed Osman Elawad, co-founder of the Sudan Blockchain Community, “Remittances are not easy and involve a high cost via official channels which make crypto the easiest and affordable way to transfer money.”
Concerns Over Financial Crime
Experts warn that without proper regulation, these digital currencies can be exploited by malicious actors for illegal activities such as:
- Money laundering
- Hacking
- Fraud
A recent study found that cryptocurrency has been used to circumvent economic sanctions imposed on Sudan by the US in 1997.
Popularity of Cryptocurrency in Sudan
Cryptocurrencies have gained popularity in Sudan, with many users embracing it as an alternative payment option. In a recent report by Bitcoin Magazine, Sudan was listed among the countries showing high demand for cryptocurrencies despite low trading volume.
Challenges of Regulation
Regulating cryptocurrency is no easy task. Governments worldwide have struggled to find a proper classification for this type of currency, and central banks vary in their positions on its use. Advocates argue that regulation is necessary to prevent criminal activities such as:
- Human trafficking
- Child pornography
- Money laundering
The Central Bank of Sudan (CBoS) has acknowledged the need for regulation, stating that there are 34 banks in the country’s banking system and the Electronic Banking System (EBS) offers an e-payment system that includes debit and credit cards and mobile-phone payment. However, the current legal framework does not cover cryptocurrencies.
Steps Towards Regulation
In June 2020, Sudan joined the Better Than Cash Alliance, a step towards modernizing government services and payment systems. This new digital environment may help in any future adoption of cryptocurrency at the state level.
Conclusion
Regulating cryptocurrencies in Sudan is crucial to ensure more security for all stakeholders, protect the country from harmful use, and provide a legal framework for government and development organizations to adopt it in their projects.