The Current State of Cape Verde’s Economy
Cape Verde, popularly known as Cabo Verde, is an island country located over 600 km off the coast of West Africa. Its economy thrives on e-commerce, agriculture, tourism, and trade. Compared to many African countries, Cape Verde has limited resources and several droughts, which have stunted its economy.
Cape Verde is a lower-middle income country with a roughly 2-3 billion dollar GDP. It is one of the few African countries with sustained political and economic stability. The country’s economy has great potential to grow, and the growing interest in cryptocurrency might be the push it needs. Let’s explore the adoption of crypto in Cape Verde.
The State of Crypto Adoption in Cape Verde
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Cape Verde is one of the few African nations that has embraced digital currency. It might seem like its location is distant from global trends, but that’s far from true. The government and the people are fully aware of the benefits of crypto adoption and are pushing for it.
Digital currency adoption for Cape Verde is necessary to foster innovation within the country. A stable blockchain adoption rate will benefit other sectors besides a blockchain payment system.
He discussed how controlling the country’s crypto adoption would demand accurate regulations. This way, it can protect individuals against fraudulent activities.
Cape Verde’s announcement of its interest in the crypto adoption rate has had a massive effect on its citizens. However, there are no numbers to deal with. There is limited information on the number of people who have adopted crypto in the country.
Crypto Laws in Cape Verde
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Cape Verde hasn’t enacted laws recognising cryptocurrencies as legal tender, but there are legal frameworks that regulate their use as assets.
According to an announcement, Deputy Prime Minister Olavo Correia stated, Cape Verde wants to achieve 60% of digital public services by 2026. He further claimed that this figure would reach 80% by 2030.
Edna Oliviera Cape Verde, minister of state modernisation and public administration, also confirms the country’s desire for digital transformations. The modernisation extends to the country’s financial system.
However, the absence of regulations and laws makes Cape Verde a neutral zone. No public discussions explicitly describe the state of crypto adoption and if the country plans to hop on anytime soon.
Taxation of Cryptocurrency in Cape Verde
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Cape Verde’s tax laws are unclear, as the government and central bank have not officially declared crypto legal. However, crypto businesses can open nationwide, get a tax number, and obtain a municipal license. Hence, we assume Cape Verde imposes corporate taxes. As for individual crypto holders, it is unclear if they are subject to income tax.
What Factors Drive Crypto Adoption in Cape Verde?
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Cape Verdeans are adopting cryptocurrency, which begs the question, “Why?” Here are the different factors driving increased crypto adoption in Cape Verde:
Lower Transaction Fees
High transaction fees hamstring the Cape Verde cash system, leading many Cape Verdeans to search for cheaper alternatives to send and spend money. Now, Cape Verdans can participate in local and international trades without concerns about excessive fees. Many Cape Verdans are based abroad; hence, cryptocurrencies can help with cross-border transfer, which is usually expensive given the current MoneyGram rates.
Introduction of Crypto Businesses
The influence of the crypto businesses on crypto adoption goes both ways. Cabo Verde is home to many crypto exchanges, so people in the country have easy access to crypto transfers. This ease of use encourages more people to participate in cryptocurrency. Cabo Verdans can transfer using notable platforms like UEEx.
Investment Opportunities
Cape Verde is a middle-income country with room to expand. Cryptocurrency is a favourable option to avoid transaction fees and possibly increase your income. People can leverage DeFi to HOLD, stake, lend, or borrow to make profits.
Challenges to Cryptocurrency Adoption in Cape Verde
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Cape Verde is experiencing phenomenal growth in cryptocurrency. However, it is not where it should be yet, and here is why:
Limited Education on Cryptocurrency
Many Cape Verdans aren’t familiar with cryptocurrency’s potential benefits, such as lower transaction fees. Moreover, many don’t know how to get started. Hence, many would instead not be involved in what they don’t know about, such as the fear of losing money.
Volatility
Cryptocurrencies are associated with price fluctuations, making it challenging for Cape Verdeans to use them. They are unpredictable, which makes storing and using them a high-risk investment. Many Cape Verdeans prefer to stick to the more expensive card payment options than cryptocurrency, which is considered risky.
Transitioning to Digital Payment
While Cape Verde has about 100% mobile penetration, transitioning to Digital Payment methods seems like a hurdle. The economy and corporate world have been built on paying with cash and cards. Hence, several businesses are hesitant to accept crypto as a payment form.
Conclusion
Cape Verde is one of the leading African countries in crypto adoption. Crypto businesses are encouraged to register if they comply with AML and KYC regulations, leading to several crypto exchanges. But while Cabo Verde is pro-crypto, no official statement backs its legality.
The general sentiment is positive, as people know crypto investment’s perks and downsides. However, clarity is still needed on the legal front. Of course, we will update occasionally, but we are not promising anything.
Frequently Asked Questions About Crypto Adoption in Cape Verde
What is the Most Popular Crypto Token in Cape Verde?
The most preferred crypto token in Cape Verde varies depending on people’s interests. However, some recurring crypto tokens are Bitcoin, Ethereum, Pleb, and Tether—research on the crypto tokens to invest in 2024.
Is Crypto Trading Legal in Cape Verde?
The legality of crypto trading is currently a grey area. However, Cabo Verdeians can trade, store, and invest in cryptocurrencies.
How Much Taxes Do Crypto Holders Have to Pay in Cape Verde?
Similar to the legality of cryptocurrencies, Cape Verde has not released an official tax statement; however, crypto businesses that plan to open in their must-haves must register and get a tax number.
Disclaimer: The views expressed in this article are not intended as financial advice and should not be taken as one. We take no responsibility for any financial decision made due to this article.
