Sudan’s central bank warns against digital currencies amid economic collapse

Getting your Trinity Audio player ready...

Sudan’s central bank has issued a public warning against the use of digital currencies, claiming residents face legal risks. The Central Bank of Sudan (CBOS) recently issued the warning, stating that digital currencies entail high risks. These include “financial crimes, electronic piracy and the risk of losing their value.”

The CBOS also believes that digital currencies come with legal risks “as they are not classified as money or even private money and property in accordance with the legislation and regulations in force in the country, due to their lack of a material cover and the lack of issuance by authorized or accredited bodies that are legally bound by them.”

The warning comes at a time when there has been a rise in adoption of digital currencies in Sudan. Citizens have been forced to explore alternatives to their local currency, the pound, which has been taking a beating ever since the country’s military successfully ousted the sitting government back in October in a coup d’état that left dozens dead in protests.

In its latest warning, the CBOS also noted the rise in social media digital currency ads, which it believes have played a role in the rise in adoption in Sudan, as state-run Sudan News Agency reported.

Since the military took over, the country has been locked by protests as the people revolted against its rule. The ousted Prime Minister Abdalla Hamdok struck a deal after the coup that saw him return to power in a power-sharing deal, but even this didn’t sit well with the people. He later had to resign after deadly protests in the capital, Khartoum.

The result of all these upheavals has been the collapse of the local economy. Inflation soared 360% in 2021 as the local currency continued to lose ground against the U.S. dollar.

The lack of stability has brought most businesses to a standstill, with one business owner in the capital telling Reuters: “Business has basically stopped in the last few months, so these are additional burdens in difficult circumstances. This is the worst it’s been since I started trading 20 years ago.”

Despite the political upheavals, the blockchain community has been making attempts to reach out to the Sudanese government. In May 2021, the BSV blockchain ecosystem’s Blockchain for Government Initiative held a historic week-long official visit to Sudan in which the integration of blockchain in governance was discussed.

Speaking on the sidelines of the two-day Blockchain Summit & Workshop, which was organized by the BSV Blockchain Association, Sudan’s Minister of Telecommunication and Digital Transformation Hashim Hasabelrasoul Hashim remarked, “The event was very great, very informative. The first-ever time in Sudan to have a blockchain ecosystem team to visit the country. People were very interactive, very excited about the event and I think that there will be many more to come after this event.”

For the past 30 years, Sudan has struggled with political instability, and as a result, it has faced severe sanctions and general isolation from the rest of the world. According to the Minister, digital transformation will be a key pillar if the country is to reform its government and make it “more efficient, more smart, more in control and more transparent.”

Jimmy Nguyen, the Founding President of the BSV Blockchain Association, who led the BSV delegation to Sudan, expressed optimism that blockchain could play a key role in transforming the Eastern African country.

“As we explore opportunities for initial blockchain projects in Sudan, we know that BSV’s massive scaling and focus on data network capabilities can provide the blockchain power needed to advance digital transformation for Sudan and greater Africa,” Nguyen remarked.

Watch: CoinGeek Zurich panel, Blockchain & the Future of Africa