Cameroon is witnessing a gradual adoption of cryptocurrencies. Buying and selling cryptocurrency is not regulated in Cameroon, nor is it illegal. When it comes to the sale of digital assets, the default legal framework is contract law, either business (BtoB) or consumer (BtoC). Therefore, anyone in Cameroon can create their own cryptocurrency and sell it to the public in Cameroon and abroad for various purposes. Cameroonians can buy and sell cryptocurrency without any oversight from the regulator and cryptocurrency projects in Cameroon attempt to comply with international (or non-binding) laws and practices.
Cryptocurrency regulation needed
The lack of regulations in Cameroon aimed at protecting buyers, whether as consumers or investors, allows scammers to proliferate. This has the consequence of increasing misunderstanding and general distrust of what is one of the greatest revolutions of this century.
When asked, most people say they are not very familiar with cryptocurrencies. Yet they are widely seen as a profitable investment opportunity without a clear understanding of the technology behind them: blockchain. This situation is not specific to Cameroon. There is a general and international consensus in the cryptocurrency industry on the need for training and education on the subject.
Today, there is much more than buying and selling cryptocurrencies. This industry is changing very rapidly. Cryptoassets were first democratized as a fundraising vehicle used by companies to receive capital without losing control of their business through various mechanisms (ICO, STO, IDO Initial, Token airdrop etc).
Over the past few years, we have seen the emergence of a new asset class ranging from shitcoins to NFTs, stablecoins to the central bank digital currency (CBDC), from a new type of legal personality (DAO) to the metaverse.
Digital assets are setting up a new legal, financial and social paradigm to which Cameroon is gradually adhering.
Crypto assets as a means of payment
Cryptoassets are used as a means of payment by some traders in Cameroon, as it is cheaper and faster than using FCFA (XAF). To some extent, crypto-assets have many advantages for international trade in Cameroon, as money can flow freely and goods and services are delivered faster. Proof of payment is computer irreversible and gas costs may be free in some cases.
The crypto asset that is most used in Cameroon for business is USDT due to its inherent stability. International investments are also made in the form of digital assets, but this phenomenon is marginal. This will grow, in my view, with the democratization of crypto.
Cryptoassets as an investment instrument
This fundraising method has not been fully adopted by entrepreneurs in Cameroon and they continue to resort to traditional fundraising mechanisms (tontines, microfinance, loans, VC, etc.). Currently, there are obstacles for cryptocurrencies to become mainstream instruments, among which alternative methods of financing are firmly and culturally embedded in society, and the current misunderstanding of blockchain is very real. Therefore, crypto-assets are currently used in a closed circle by crypto-entrepreneurs to raise funds for their projects. It will take incentives for crypto-assets to become more mainstream. In this regard, NFTs are more likely to succeed.
There are many scam projects offered to Cameroonians in WhatsApp and Facebook groups, promising an impossible return on investment. People usually fall into these traps because life is tough and the prospect of making easy money is alluring. But easy money does not exist, especially in cryptocurrency trading.
Therefore, there is an urgent need for authoritative crypto players in Cameroon to suggest regulations in order to restore confidence in these assets as an investment in a BtoC framework. Otherwise, it looks like scams have a bright future ahead of them.
the peer to peer is used by Cameroonians to acquire stablecoins to trade or hold in reserve. Over-the-counter is popular among Cameroonians to buy cryptocurrency because they don’t have much choice. Indeed, none of the top 20 cryptocurrency exchanges in the world accept payment by visa with FCFA currency. Therefore, Cameroonians can buy digital assets created in their own country, which may have little or no value on international exchanges, and exchange them for another crypto on an exchange. They can also buy them through a broker at a much higher price than they could have had directly on the crypto markets. As soon as the main crypto exchanges accept direct purchase in FCFA and offer a trading pair in exchange in FCFA, it is very likely to see a decrease in trading peer to peer in Cameroon.
The tokenization of society and the facilitation of trade
Crypto assets are not just about currency. The digital asset can also represent art, music, title and proof of ownership, invoice, bill of lading. Non-fungible tokens (NFTs) have created a whole new industry with far-reaching implications.
For example, tokenizing real estate can provide great protection against the illegal sale of land or property in the absence of the rightful owner. Blockchain provides cost-effective, computationally non-reversible proof of ownership. Houses and land can be registered on the blockchain. Given the boom in real estate in Cameroon, digital assets will be a quick and cost-effective land management tool.
Could crypto be a solution for the economic development of Cameroon? I firmly believe that it is part of the solution. The crypto-asset industry is multi-faceted: mining, trading and selling assets, and the asset itself can perform many functions. Each of these facets can generate revenue.
Cryptoassets and Debt Settlement in Cameroon
Cameroon should consider the creation of a CBDC for the settlement of its debt. In 2021, the Cameroon’s public debt was $18,329 million. China holds 61.3% of the bilateral debt of cameroon, or 27.4% of its total debt, and the African Development Bank holds 30.1% of the multilateral debt, or 12.3% of its external debt. China has already developed its own CBDC. The Banque de France has successfully conducted the latest experiment of its CBDC Interbank Settlement Programlaunched in March 2020.
At the same time, if Cameroon had bought 1,000 bitcoins (BTC) in 2018 at $4,000, the country would have no public debt today. Thus, Cameroon may well decide to mine other cryptocurrencies or attract farms, which would generate tax revenue to be used for debt repayment. The country’s debt could be partly repaid with cryptoassets.
A bitcoin (BTC) revolution coming to Cameroon?
Sadly, Cameroon has not embraced the bitcoin revolution and seen it as an opportunity to build wealth, earn money from the crypto markets, and attract big business to its jurisdiction. The country has not allowed the transfer of money almost free for its diaspora and has not chosen to use bitcoin as a store of wealth.
All of the above is part of a public policy that requires the establishment of a complete legal arsenal in order to establish a jurisdiction favorable to cryptocurrencies and a techhub. With the port of Douala, Cameroon could even become a leader in the region for blockchain-based international trade.
Inevitably, discussing crypto adoption in Cameroon will require addressing, among many topics, the management of natural resources. The shortage of electricity is an obstacle to setting up cryptocurrency farms. This shortage must itself be reconciled with the general assertion that Cameroon’s electricity production exceeds the population’s needs, but is poorly managed.
Since the major oil and gas company ExxonMobil recently announced that the pilot project for the use of excess natural gas used for the purpose of cryptocurrency mining will be extended to Nigeria, neighboring Cameroon will ultimately have to take a position on the vision it wishes to implement in terms of the regulation of digital assets.
It is also likely that crypto-assets will soon be used in Cameroon as a tool to fight inflation.
In any event, there is much more to the Cameroonian crypto market than meets the eye, and much more that could not be touched on here. The absence of clear regulatory guidelines makes Cameroon a land of opportunities facing major challenges.
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Pascaline MELINON is a lawyer at the Paris Bar in corporate law and cryptographic assets. She holds an LLM European Legal Studies – Distinction from the University of Bristol – UK and an LLB European and International Law – First Class UWE-Bristol- UK). She is the founder of her law firm and has been working for established clients around the world on various aspects of the digital asset industry since 2016.
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Cryptoassets in Cameroon: A Land of Opportunities?
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