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Inclusiveness vs. Volatility: The Impact of Crypto and Blockchain Technology on Business

There are widely differing opinions about blockchain and cryptocurrency. Nicholas Correa, Corporate Expert and TMT, spoke to Africa Legal about the impacts of technology on business, countries and lawyers.

Although there are controversies over cryptocurrencies, lawyers should learn about the risks and opportunities of these technologies while keeping an eye on diverse government and regulatory responses, says Nicholas Correa, a consultant at Conyers’ office in the British Virgin Islands (BVI).

“We really had to deal with what is a rapidly developing sector of the economy,” Correa said, noting that he expects the BVI to adopt digital asset regulation later this year. “It is about following developments in the commercial context, but also from a regulatory perspective and being able to advise clients accordingly.”

While Bitcoin was established as a digital, decentralized alternative to government-issued money, governments across Africa and the world are responding to the growing popularity and use of cryptocurrencies in different ways. Last year, Nigeria’s central bank banned cryptocurrency users from accessing banking services. On the contrary, in 2022, the Central African Republic made bitcoin an official currency along with the CFA franc.

Korea believes that a balance must be found between taking advantage of the fundamental benefits of cryptocurrency and blockchain technology, while protecting businesses and individuals at the same time.

“The challenge is that it is a rapidly changing space, and speaking of cryptocurrencies, it is very volatile,” he commented. Regulators have a role to play in catching up, and what would have been allowed 18 months ago may not be allowed today. Clients looking to enter this space need to understand whether they will be on the right side of law and regulation.”

Conyers is a leading company with experience in the largest transactions involving BVI entities (including companies operating across a variety of sectors in Africa), and can advise clients on using BVI entities as investment vehicles in crypto or owning blockchain technology.

“One of the things we always say is that this is an area in flux. It’s not like traditional financial services, where things can remain constant for several years. This is a very new industry and technology, and the risks and attitudes of governments and regulators change, depending on how they evolve. We’re still at the beginning.”

Correa noted that Blockchain technology offers a decentralized registry that is transparent in nature and presumably immutable, which – if used correctly – provides greater transaction security. For businesses, it is likely to be a more efficient system for moving funds, effecting settlements, banking and finance, and allowing the use of smart contracts. It also provides financial inclusion for unbanked individuals.

“On the African continent, we see the impact of cryptocurrency and blockchain on small and medium-sized businesses and start-ups,” Correa explained. It gives small businesses an effective and affordable way to make and receive payments, access investments and savings products, and build a credit history. Enabling this access to technology can boost the growth of SMEs on the continent, and at the macro level lead to more job creation and economic development.”

Korea has received a lot of interest from clients and believes that a ban like the one in Nigeria risks pushing people into unregulated areas that pose a greater risk to the financial system.

“The challenge is to find a middle ground between the need for some regulation to protect investors, individuals, and system users, versus not stifling innovation.”

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