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Risks and High Costs Outweigh Benefits?



A recent survey on the topic of central bank digital currency (CBDC) development in Africa gives some fresh insight into their evolution and regulators’ motivations and concerns. Nonetheless, analysts worldwide are raising questions about CBDC implementation, be it in Africa, China, or the U.S. 

Central bank digital currencies, popularly known as CBDCs, have been touted as the next step toward financial inclusion. They have the potential to transform the financial system specific to a region. So much potential that government bodies are collaborating with regulatory bodies to solidify their control over their respective payment systems. 

From central banking and tech-driven institutions to politicians—many have their fingers on the pulse of this latest payment innovation. Places like China and Russia have already launched pilot programs, while others, such as the U.S., are in the research phase. BeInCrypto has extensively covered the pros and cons of CBDC implementations in China and the United States.

But another critical area for CBDC development is in Africa. Severe cracks have emerged in CBDC operations in this region, which arguably, could see the most benefits.

African CBDCs: The What and Why  

CBDCs are envisioned as a tool to bolster the monetary system with the central bank at the core to support safe, low-cost, and inclusive payments while promoting innovation. 

CBDCs could bring financial services to people who previously didn’t have bank accounts, especially if designed for offline use. In remote areas without internet access, digital transactions can be made at little or no cost using simple feature phones. This has to potential to further foster cross-border transfers and payments. 

Sub-Saharan Africa remains the most expensive region to send and receive money, with an average cost of just under 8%t of the transfer amount.

Average costs of a financial transaction by region of the world per data from World Bank
Source: World Bank

CBDCs could ideally help counter this setback and promote financial inclusion within the African region, especially compared to other EMEs (emerging market economies).

Compared to the latter, financial inclusion ranks above digital cash, among other motivations, as seen in the chart below: 

Benefits of CBDCs- Each bar indicates the percentage of central banks that choose a given motivation as one of their top three benefits of CBDC/barrier to financial inclusion

While many regions across the African continent are exploring CBDC implementation, Nigeria and Ghana are leading the pack. 

Status report on CBDCs in Africa 

The interest of African central banks in CBDCs has recently shot up. While all those surveyed are analyzing CBDCs, only a few have projects at advanced stages (pilot or live). 

Today’s CBDCs status across the globe with particular focus on Africa

Several sub-Saharan African central banks are either researching or are in the pilot phase of a digital currency following Nigeria’s introduction of the e-Naira and Ghana’s e-cedi.

There are still many risks and challenges, including data privacy, cyber-attacks, and public access to digital infrastructure.

Visible cracks in the infrastructure 

A recent report highlighted some key differences and varying motivations in the African CBDC movement. The Bank for International Settlements (BIS) surveyed 19 African central banks that served as the report’s base: 

A direct threat to freedom that a CBDC might pose is closely related to its threat to privacy. Per the report, the main operational challenge noted is cyber risk, even more in Africa than elsewhere.

Concerns related to CBDCs- Each bar indicates the percentage of central banks that choose a given downside as one of their top three concerns.

A successful cyberattack on a CBDC could cause severe and widespread damage and erode the basis of an entire region’s economy. Attacks on credit card systems and databases containing consumer credit profiles already offer a glimpse of the potential threats involved. 

You might remember an infamous hack on the central bank of Bangladesh in 2016. The perpetrators compromised Bangladesh Bank’s computer network, observed how transfers were done and gained access to the bank’s credentials for payment transfers.

Bangladesh Bank heist or SWIFT attack - is one of the biggest bank robberies ever and the most impressive cyber-crime in history

Another significant challenge is the operational burden of maintaining a CBDC. The BIS survey notes: 

“Here African central banks highlight aspects very similar to other EMEs: network resilience, the cost, availability, and combinability of technologies, and their scalability and functionalities. The operational cost of such a complex system is high.” 

Considerations determining infrastructure- Each bar indicates the percentage of central banks that choose a given motivation as one of their top five considerations regarding infrastructure.

Meanwhile, the risk of low adoption and bank disintegration also ranked among the top concerns. As BeInCrypto reported, Nigeria’s central bank digital currency has been adopted by just 0.50% of the country’s population. Following this, different analysts proclaimed that “the eNaira has been a massive failure.”

These setbacks could potentially even complicate monetary policy.

Concerns in the US and around the globe

BeInCrypto reached out to Nick Anthony, a policy analyst at the Cato Institute, via Twitter to comment on the ongoing CBDC situation.

The fellow analyst raised similar red flags over CBDCs adoption, including cybersecurity risks as a whole in the U.S. Given the power that the US holds, CBDCs implementation can have direct/indirect effects across the globe. Anthony opined: 

“A CBDC would most likely be the single largest assault on financial privacy since the creation of the Bank Secrecy Act and the establishment of the third-party doctrine.” 

Moreover, he countered the financial inclusion attribute about the US, as was the case for Africa discussed earlier in the article. He added, ‘considering privacy and distrust for banks are the top three reasons for being unbanked, it’s hard to imagine how a CBDC would remedy the issue when trust in the government is at historic lows.’ 

Public trust for the US government is at historic lows
Data compiled by Nick Anthony

There is also a risk that a CBDC could undermine both the foundation and the future of financial markets. 

“Not only would it risk disintermediating the banking system, but countries around the world have shown that they want a CBDC specifically to hold their monopoly over money.”

Suggestions to consider 

Congress should explicitly prohibit the Federal Reserve and Treasury from issuing a CBDC in any form to prevent financial privacy, financial freedom, free markets, and cyber security risks. To do so, Congress could amend the Federal Reserve Act, as highlighted in a research paper shared with BeInCrypto. 

Lastly, in a concluding narrative, the policy analyst asserted: 

“A U.S. CBDC poses substantial risks to financial privacy, financial freedom, free markets, and cybersecurity. Yet the purported benefits fail to stand up to scrutiny. CBDCs have certainly made central banks the talk of the town and thrown a splash of life into an otherwise dense policy field. But there is no reason for the U.S. government to issue a CBDC when the costs are so high and the benefits are so low.” 

But again, these are suggestions. While the U.S. possesses a different economic strength and power than Africa, CBDC concerns remain at the forefront. 


All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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US Treasury Sanctions Hit Russian Arms Dealer’s Crypto Wallets




The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) has imposed full blocking sanctions on 22 individuals and entities across several countries, including Russia and Cyprus, as part of its sanctions evasion network that supports Russia’s military-industrial complex.

The sanctions were imposed under Executive Order 14024 and are part of the U.S.’s strategy to target sanctions evasion globally, close key channels, and limit Russia’s access to revenue for its war in Ukraine.

US Treasury Goes After Russian Arms Dealer’s Cryptos

The U.S. Treasury’s sanctions were imposed by the Russian Elites, Proxies, and Oligarchs (REPO) Task Force, a multilateral effort to identify, freeze, and seize assets of sanctioned Russians worldwide. This task force leverages information from international REPO partners and key data from Treasury’s Financial Crimes Enforcement Network (FinCEN) to share information, track Russian assets, and sever Russian proxies from the international financial system.

The REPO Task Force aims to maximize the impact of multilateral sanctions while preventing opportunities for Russia to evade or circumvent U.S. and partner sanctions.

The primary target of the sanctions is a Russian sanctions evasion network led by Russia and Cyprus-based arms dealer Igor Zimenkov and his son Jonatan Zimenkov. The Zimenkov network has been involved in projects related to Russia’s defense capabilities, including supplying a Russian company with high-tech devices after Russia’s full-scale invasion of Ukraine. They have also supported sanctioned state-owned Russian defense entities, Rosoboroneksport OAO and State Corporation Rostec, which are critical components of Russia’s military-industrial complex.

Igor and Jonatan Zimenkov have worked closely together to enable Russian defense sales to third-party governments and have engaged directly with Rosoboroneksport’s potential clients to facilitate sales of Russian defense material. Igor Zimenkov has also supported the Belarusian military-industrial complex by enabling the sales efforts of State Owned Foreign Trade Unitary Enterprise Belspetsvneshtechnika in Latin America.

Today, Igor Zimenkov was designated for operating in the defense and related materiel sector of the Russian Federation economy, while Jonatan Zimenkov was designated for having materially assisted, sponsored, or provided financial, material, or technological support for Igor Zimenkov, Rosoboroneksport, and other sanctioned entities.

The Zimenkov network used front companies to funnel money and maintain a lawful appearance. Singapore-based Zimenkov network shell company Asia Trading & Construction PTE Limited and its director, Serena Bee Lin Ng, have sold helicopters to clients in Africa on behalf of the Zimenkov network. Additionally, Cyprus-based Zimenkov network shell company Lobster Management Limited and its director, Mikhail Petrov, have facilitated sanctions evasion by providing support to sanctioned entities.

The Treasury’s OFAC continues to work with its international partners to coordinate information sharing and enforcement and to travel the world in pursuit of sanctions evasion. The sanctions imposed today are a clear signal to Russia and its military-industrial complex that the U.S. and its partners are committed to tightening sanctions enforcement and preventing the evasion of international sanctions.


BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.

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Digital Wallet Growth Will Enable More Closed-Loop Transactions




Crypto and fintech investment firm Ark Invest has made bold predictions about digital wallets, estimating that more than half the world will soon be using at least one.

In its Jan. 31 ‘Big Ideas 2023’ research report, Ark Invest revealed that digital wallet global population penetration is currently 40%. This equates to around 3.2 billion users, the firm added.

However, the research suggests that the number of online wallet users will increase at an annual rate of 8%. The firm predicted that this will result in a global population penetration of 65% by 2030:

“Having onboarded billions of consumers and millions of merchants, digital wallets could transform the economics associated with traditional payment transactions, saving them nearly $50 billion in costs.”

It also noted that digital wallets were gaining market share in online and offline transactions. Cash is definitely in decline, accelerated by government initiatives to go digital, as recently seen in Nigeria.

Payment method trends - Ark Invest
Payment method trends – Ark Invest

Digital Wallet Growth to Continue

Ark reported that digital wallets were scaling faster than accounts at traditional financial institutions. Furthermore, U.S. digital wallet adoption rebounded in 2022, surpassing previous highs following a COVID-induced dip.

The firm estimates that U.S. digital wallet users will increase by 7% annually during the next eight years. This will be a growth of around 160 million in 2022 to more than 260 million by the end of the decade.

Digital wallet user growth - Ark Invest
Digital wallet user growth – Ark Invest

Furthermore, online wallets are enabling “closed-loop” ecosystems. This is where consumers and merchants can transact directly, cutting out the middleman. 

“Digital wallets are onboarding millions of merchants to platforms that enable direct consumer-merchant transactions that disintermediate traditional financial institutions,” it noted.

In this closed-loop environment, wallet providers capture more value per transaction, enabling savings to be shared with merchants and consumers.

Open and Closed Lopp transactions - Ark Invest
Open and Closed Lopp transactions – Ark Invest

Additionally, Ark noted that closed-loop transactions could boost the margin structure of wallet providers.

It used Block Inc. (formerly Square) as an example, stating that it paid around 60% of customer transaction fees to third parties in 2022. The fees were paid for interchange, assessment, processing, and bank settlement fees. Block’s net take rate could more than double if customers transacted directly with merchants.

Block Inc. fee structure - Ark Invest
Block Inc. fee structure – Ark Invest

Closed Loop Transactions Could Top 50%

Finally, Ark predicted that these closed-loop transactions could account for over 50% of digital payments by 2030.

It used China as an example where wallets and merchants are largely internal or domestic only.

Closed loop cost savings - Ark Invest
Closed loop cost savings – Ark Invest

In conclusion, digital wallet growth is set to continue. Cutting out the intermediary which they facilitate is beneficial to both the consumer and merchant.


BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.

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Strike Launches Lightning Remittances in the Philippines




Bitcoin fintech giant Strike rolled out its Lightning Network money transfer service Send Globally in the Philippines, a $35 billion remittance market.

Send Globally launched in the Southeast Asian country on Jan. 31, 2023, enabling businesses and tourists to receive international money transfers in the Philippine peso. The country receives $35 billion in remittances globally.

How Strike’s Send Globally Service Works

“Remittances are a broken system and Strike delivers an incredibly empowering experience for people to send money around the world in nearly an instant,” Strike CEO Jack Mallers said.

According to a press release, Strike’s remittance service converts a sender’s fiat into Bitcoin and sends the Bitcoin to a Strike partner in the destination country using the Lightning Network, which in the case of the Philippines, is then converts the Bitcoin to the recipient’s fiat currency and credits their bank or mobile money account, with Strike shielding both parties from the tax implications of handling Bitcoin directly.

Bitcoin’s Lightning Network is a layer-two solution on the Bitcoin blockchain that allows micropayments between nodes over a payment channel. Unlike traditional payment networks, Lightning’s low fees enable almost zero-cost remittances.

Recently, Mallers announced a trial to bring Bitcoin Lightning Network payments to retailers through a partnership with Fiserv’s point-of-sale solution Clover Commerce. The trial allows any application with Lightning capability to pay Bitcoin for goods and services at Clover merchants.

Philippine Smartphone and Internet Adoption Auger Well for Strike

Send Globally rolled out to Strike users in Ghana, Nigeria, and Kenya on Dec. 6, 2022, where it has reportedly gained rapid traction.

However, mainstream adoption in the Philippines will depend heavily on network effects, driven by smartphone and internet penetration.

According to Statista, the number of smartphone users will increase from 85 million in 2022 to 87 million by 2023. Additionally, forecasts suggest smartphone users will increase to 91.5 million in 2025, representing roughly 83% of the island nation’s population.

Smartphone Adoption in the Philippines
Smartphone Adoption in the Philippines | Source: Statista

Additionally, Statista predicts that about three-quarters of the population will have internet access by the end of 2023. Growing internet access increases the chance of Strike’s success, since it helped drive adoption of crypto game Axie Infinity.

For Be[In]Crypto’s latest Bitcoin (BTC) analysis, click here.


BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.

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