The Current Status of Crypto Adoption in Gambia
Source: Pixabay
Gambia, a culturally rich country with a small but resilient economy, has just made a groundbreaking move to include cryptocurrency in its financial ecosystem.
From being cautious, Gambia is now following the step of other burgeoning digital finance landscapes of West African countries by introducing a regulatory framework that embraces cryptocurrencies and the full benefit accrued to digital currencies.
Historically, Gambia’s approach to cryptocurrency can be described as a “watchful waiting” approach. Crypto transactions were in a gray area because of a lack of formal regulations in place, and this exposed users to potential fraud, security breaches, and volatility associated with unregulated markets.
As crypto adoption increased around the country and the world, more Gambian leaders appeared to appreciate the potential and challenges digital assets pose. This watchful approach has evolved into a well-thought-out regulatory strategy that caters to Gambia’s recognition of the financial and economic opportunities of crypto in 2024.
In a recent progressive development, Gambia introduced a regulatory sandbox in order to encourage innovation in fintech. Within this framework, startups and established businesses can experiment with new crypto products and services in a confined and supervised space.
There is great enthusiasm with the rapid emergence of FinTechs and the Central Bank’s regulatory sandboxes which should allow and accelerate innovation.
This blocks any harm and allows business growth as they can create and innovate while mitigating risks to the consumers and the financial system.
In addition, the sandbox model is an excellent opportunity for Gambia to keep up with the rapidly changing digital financial landscape, allowing local young entrepreneurs to flourish and draw funds without jeopardizing security.
By encouraging this type of risky innovation, Gambia is preparing the ground for the evolution of new digital tools that can help maximize economic progress in the nation.
Crypto Law In Gambia
Source: Pixabay
2024 is undoubtedly a crucial year in the context of Gambia’s journey of formulating a legitimate framework to regulate cryptocurrencies. Gambia’s outlook toward regulating cryptocurrencies matured from the absence of rules to acceptance and the use of digital currencies.
Previously, Gambia had taken a rather cautious attitude and posture towards cryptocurrencies, tolerating them without specific legal frameworks. This lack of regulation left crypto-transactions in a gray area, where there were no prohibitions but neither were there any protections from risks like fraud or market manipulation.
The Gambian cryptocurrency regulatory landscape touches key pillars, starting from giving digital assets legal recognition to consumer protection, anti-money laundering protocols, and driving fintech innovation.
Legal recognition of digital currencies remains one of the crucial steps towards bringing clarity to crypto activities. Such a move ushers in possible policies on taxation, compliance, and investor protection, just like those seen in many parts of the world.
The government of Gambia has enforced tight crypto regulations on exchanges and wallet providers due to the volatility of digital currencies. The regulation demands security standards, operational transparency, and user protection akin to the highest bar. In such a way, such regulations provide a way for investors to be safe from security breaches and fraud,
The Gambian authorities, in a bid to curb illicit dealings, have made it mandatory for crypto service providers to subject themselves to AML and CTF standards that include KYC and reporting suspicious transactions.
The Gambia has adequate legal basis for the widest range of international cooperation, including mutual legal assistance (MLA), extradition and the tracing of criminal assets. However, the authorities have made very limited use of MLA in relation to ML, associated predicate offenses, TF and asset tracing.
Such regulations will align with international best practices that aim to protect the integrity of the financial system of Gambia from being compromised by new digital currencies and ensure they are not used in any form of illegal deal.
Taxation of Cryptocurrency in Gambia
Source: Pixabay
The income tax system in Gambia, as highlighted by the Income and Value Added Tax Act of 2012, does not consider the inclusion of cryptocurrency taxation.
This act has principally provided for the imposition of taxes on incomes derived from businesses, employment, and property, with imposed taxes upon individual and corporate earnings. Furthermore, a value-added tax is imposed on goods and services in the country.
The Act does not consider cryptocurrency to be an asset that is taxable; income or gains related to crypto are therefore not defined under Gambian law. For example, when persons or companies receive cryptocurrency through investment gains or as income, such earnings would not be classified or taxed within the existing structure by the Gambia Revenue Authority.
The Gambia Revenue Authority (GRA) is the merger of the Customs & Excise Department and the Central Revenue Department (Income Tax Department) which used to be civil service institutions since independence. The GRA was established by an Act of the National Assembly; the GRA Act 2004.
Most countries with clear legislation on cryptocurrencies classify such assets as capital and are therefore taxed with regard to capital gains, or income, depending on the nature of the transactions.
When Gambia considers the implementation of its regulations concerning digital assets in the future, such classifications can be pursued by instituting income tax on crypto earnings or capital gains tax on profits from trading.
In the meantime, crypto regulation in the Gambia pertaining to legal recognition and anti-money laundering will reach taxation in due time as the government tries to find a balance between innovation and fiscal responsibility.
Individuals and businesses operating in The Gambia who are presently involved in crypto activities are advised to consult tax professionals who will take the necessary steps that comply with the general income and business tax laws until such time as more specific crypto-related laws are enacted.
Factors Driving Crypto Adoption in Gambia
Source: Pixabay
The drivers of crypto adoption in Gambia are multidimensional, complex, and deeply set in socio-economic, technological, and cultural dynamics. These dynamics include the following reasons:
Economic Instability and Protection against Inflation
Like many other African countries, Gambia is plagued daily by currency fluctuations and economic turmoil that affect their local purchasing power. Cryptocurrency offers Gambians a form of store of value and an opportunity to hedge their resources from the influence of inflation.
Demand for Financial Inclusion
Traditional banking access is poor in Gambia, with zero financial infrastructure in the rural areas. Cryptocurrency offers an avenue for the unbanked population to access digital financial services independent of bank branches or complicated documentation.
Need for Affordable, Effective Remittances
The Gambia receives a high volume of remittances from the diaspora, and different traditional channels charge very high fees for their remittance services, reducing the amounts recipients get. Cryptocurrency transactions are faster at a very low cost compared to the existing methods of sending and receiving funds since there is less intermediary involvement and at a much cheaper cost.
Youth Interest and Technological Adaptation
The majority of the Gambian population is young, technologically savvy, and eager for a taste of newer financial technologies. This generation uses cryptocurrency as one of many means of economic empowerment, investing, and ways through which youths manage their finances.
Challenges Facing Crypto Adoption in Gambia
Source: Pixabay
Common issues pertinent to the adoption of cryptocurrencies in Gambia include the following:
Limited Access to the Internet
The lack of reliable internet access in many parts of Gambia ultimately limits accessibility to digital financial services and crypto accessibility within the urban confines. Gambians, especially in rural areas, depend on physical contact with traditional facilities to access their finances. Poor internet access further increases their dependence on paper-based banking solutions.
Low Financial Inclusion
Most Gambians do not know anything about cryptocurrency or decentralized finance, and as such are very skeptical and misunderstand it. Basic knowledge about finance often revolves around conventional options like savings accounts or the real estate market.
Lack of regulatory clarity
Without a clear-cut regulatory framework, it becomes really tough to conduct activities legally within the crypto space by enterprises and people. On the other hand, a lack of regulation could leave users open to scam artists or unsavory operators. Gambians are wary of investing in financial solutions that are yet to be approved by the government.
Linguistic Barriers in Education
While some of the crypto resources have been translated into major African languages, the diversity of languages and dialects in Gambia limits widespread understanding. Crypto education should be translated into more dialects to appeal to a wider audience.
Banking Restrictions and Account Freezes
Central banks in several African countries like Nigeria have clipped, if not outright banned, crypto-related activities in their country. This has forced Gambians to rely on peer-to-peer exchanges that feature heightened risks and less security compared to other types.
Potential Benefits of Crypto Adoption
Source: Pixabay
The adoption of cryptocurrency in Gambia offers multiple benefits to the country. These benefits include the following:
Financial Liberty for the Unbanked Population in Rural and Urban Areas
Many Gambians do not have access to traditional banking. This gap in access to financial resources can be filled by cryptocurrency, as all one needs is a mobile phone. In this regard, crypto saves the user from filling out paperwork to open a bank account to save, invest in, or transfer funds.
Lower Transaction Costs
Most traditional financial systems impose high costs for money transfers, even for international transfers. Bitcoins, on the other hand, enable cheaper transactions. This is highly valued in Gambia, where a high proportion of its people depend on money sent home from abroad.
With cryptocurrency adoption, Gambians would have the potential to reduce the cost of sending and receiving money and would, therefore, retain more money within the local community to stimulate economic growth.
SME Economic Opportunities
Another role that cryptocurrencies play is providing accessible and affordable facilities to small businesses in Gambia. SMEs will be in a better position to easily trade with international partners because of access to new markets and customers as crypto eliminates exorbitant fees and extended times of processing that would normally be expected of conventional banking.
Access to DeFi Solutions
DeFi represents the conceptualization and building of financial services like lending, savings, and insurance on Blockchain without classic financial mediation. Of course, this may offer new ways for Gambians to borrow money or to make interest on money. This breaks down the financial barrier that shuts off anybody without a credit history or some form of collateral.
Conclusion
To sum it up, the level of use of cryptocurrency in Gambia is influenced by the economy, technological and demographic factors, regionalism, and global consciousness. Although The Gambia’s regulatory environment provides a framework for cryptocurrency integration, there are a number of drawbacks that it has to deal with.
Gambia’s strategy should be tailored to the specificities of the country’s population. It is worth noting that most of the young people and women traders who engage in cross-border trading using digital means are ardent supporters of cryptocurrencies. These categories of people are likely to gain a lot from the financial inclusion, but also need to be provided with a sense of direction.
