Cryptocurrency Landscape in Ethiopia Prior to 2024

As the global interest in cryptocurrencies continued to rise leading up to 2024, Ethiopia’s stance on the matter evolved, reflecting a balance between caution and an openness to emerging technologies.

Early Skepticism and Regulatory Stance

In Ethiopia, the period leading up to 2024 saw no legal recognition of cryptocurrencies. The Ethiopian government and its financial regulators did not expressly recognize cryptocurrencies as legal tender. This lack of recognition inherently meant that cryptocurrencies like Bitcoin and Ethereum did not enjoy the legal status that traditional fiat currencies did in Ethiopia. In June 2022, Ethiopia’s central bank, the National Bank of Ethiopia (NBE), took a definitive stance against cryptocurrencies. The NBE issued a proclamation declaring that all financial transactions in the nation must be paid in the nation’s currency, the Birr, unless explicitly permitted by the bank. This move positioned Ethiopia among the group of crypto-antagonistic countries, with crypto transactions being declared illegal and a warning issued to the public to avoid using them​

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Monitoring and Evolving Understanding

Despite the skepticism, there were indications that Ethiopia was monitoring the cryptocurrency space closely. A 2018 study highlighted the country’s contentious stance towards cryptocurrencies, while also noting that Ethiopian regulators were continually observing the situation. This observation implied a nuanced approach, one that did not rush into either fully embracing or outright rejecting the new digital assets​

​The Blockchain Technology Focus

While cryptocurrencies themselves did not find favor in the legal framework, blockchain technology, the underlying technology of cryptocurrencies, saw a different trajectory. The Ethiopian government acknowledged the potential of blockchain technology. This was evident in November 2017, when experts gathered in Addis Ababa to review a UNECA report exploring the opportunities blockchain technology could offer in Africa. The Ethiopian government recognized blockchain as an emerging technology with significant potential, requiring careful evaluation to determine its suitability and return on investment​

​The Cardano MOU: A Major Step

A significant development in Ethiopia’s blockchain journey was the memorandum of understanding (MOU) signed with the cryptocurrency startup Cardano. This collaboration aimed to create a national database of student and teacher IDs, storing educational records and tracking academic performance using blockchain technology. This project, described as the largest blockchain deal signed by a government, marked a watershed moment for the use of blockchain and the crypto-asset industry in Ethiopia. It was considered a major step towards financial inclusion and aligned with the developmental agendas of both the United Nations Sustainable Development Goals and the African Union Agenda 2063 goals​

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Conclusion

The legislative and regulatory landscape for cryptocurrencies in Ethiopia prior to 2024 was marked by a cautious approach towards cryptocurrencies themselves, while simultaneously showing a greater openness and interest in the potential of blockchain technology. The government’s collaboration with Cardano highlighted this interest, signaling a shift in attitude towards the broader possibilities of blockchain beyond just cryptocurrencies. The period leading up to 2024 can thus be seen as a time of observation, regulation, and tentative exploration for Ethiopia in the realm of digital currencies and blockchain technology.