Ethiopia’s central bank on Monday warned citizens against engaging in illegal transactions in cryptocurrencies like bitcoins.
The National Bank of Ethiopia (NBE) said digital currencies like cryptocurrencies haven’t been recognized by the apex bank as a transactional and payment method, state-affiliated Fana Broadcasting Corporate (FBC) reported.
“Ethiopia’s national currency is the Ethiopian Birr, with any financial transaction in Ethiopia to be paid in Birrs, according to the law,” the NBE said in a statement.
NBE warned that digital currencies are being used to conduct informal financial transactions and money laundering schemes in Ethiopia. It called on the public to cease trading in digital currencies and to report to authorities when they see such illegal transactions.
Enforcement agencies, tax authorities, and regulators around the world are looking for ways to regulate and control transactions in cryptocurrencies. To achieve this, Central Banks around the world are contemplating introducing their own digital currencies (CBDC). In Africa, Ghana, Morocco, Egypt, Kenya, and South Africa are exploring CBDC’s viability.
Difference Between Cryptocurrencies and CBDC
Cryptocurrency is any type of digital or virtual currency that uses encryption to make transactions safe. They don’t have a central issuing or regulating authority but instead rely on a decentralised system to log transactions and generate new units.
CBDC, on the other hand, is the virtual format of a country or region’s base currency. They are being developed in a number of nations to tame the popularity of cryptocurrencies and stable coins.