Economic Union of 15 West African States Voices Concerns Over Crypto Volatility

Several other risks in the crypto markets were identified by the union's members including shallow liquidity and a lack of legal parameters.

AccessTimeIconJul 8, 2021 at 7:19 a.m. UTC
Updated Sep 14, 2021 at 1:22 p.m. UTC

A regional and economic union of 15 West African nations has expressed concerns over the use of cryptocurrencies in the region because of crypto's volatility and other risks.

According to a report by news outlet Leadership on Thursday, the member nations said bitcoin's decline in recent months was a reminder that cryptocurrencies are not safe-haven assets.

The comments came during a parliamentary meeting of the joint committees of the Economic Community of West African States (ECOWAS) in Ouagadougou, Burkina Faso.

Several cryptocurrency experts and resource personnel were also present at the meeting, according to the report.

The region has had a mixed experience with the nascent asset class. At times crypto has helped the unbanked in the region, although earlier this year, Nigeria's central bank ordered institutions under its purview to block accounts tied up in crypto. It has since softened its stance.

ECOWAS also said that cryptocurrencies can be refused as payment without the necessary legal protections normally afforded to government-issued fiat.

Other risks include their volatile and speculative nature as well as susceptibility to theft.

The union also pointed to crypto's insecure liquidity in comparison to the $6.6 trillion foreign exchange market and the fact that 96% of cryptocurrencies is owned by only 2.5% of users.

CoinDesk was unable to determine where ECOWAS got its figures. Glassnode data show wallet addresses holding more than one bitcoin have been on the decline since the year began, while those holding less than one were increasing.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Investing in the Future of the Digital Economy
October 18-19 | Spring Studio, NYC