Quartz reported on Ethiopia’s move from prohibition to regulator of cryptocurrencies and other digital assets.
In just three months, the country made the move, reversing course from its ban. Now, the country is handing over regulatory powers to the INSA, the country’s cybersecurity agency. Those crypto platforms which fail to register will be prosecuted.
“Ethiopia is in an interesting position here. They aren’t widely considered to be a crypto or tech powerhouse, by any means, but they are slowly and steadily moving in the right direction. Right now, reports have the country pegged at seventh on the continent with 1.8 million Bitcoin traders. Since the EU moved forward with MiCA, there has been additional pressure for countries to decide how they will treat cryptocurrencies, and Ethiopia could be on a rather novel track,” explained Richard Gardner, CEO of Modulus, a US-based developer of ultra-high-performance trading and surveillance technology that powers global equities, derivatives, and digital asset exchanges.
“The INSA boasts that it thwarted 97% of cyberattacks over the past year, and it credits that security with over $26 million in savings. While 97% isn’t a perfect record, by any means, the country seems intent on giving cybersecurity projects some level of funding to ensure that they are a leader in this arena on a continental level,” said Gardner.
“Handing over cryptocurrency regulation to them makes all the sense in the world, and I’ve been talking about the need to regulate and audit the digital assets market on the security side for years. We’re now seeing nine-figure hacks on a regular basis. First, an industry cannot sustain such asset drains on a continual basis. Second, we’ve been seeing hacks get bigger and more sophisticated for years. Third, and perhaps most importantly, these hacks are now being carried out by enemy nation-state sponsors, such as The Lazarus Group from North Korea,” said Gardner.
“Most politicians talk about the need to stem money laundering, and that is absolutely true. But, I’d argue that an even bigger threat to consumers, investors, and national security is actually the security of these exchanges and custodians. Exchanges and other de-fi platforms are utilizing open-source development practices, and that is, in large part, is what’s rolling out the red carpet to these bad actors,” said Gardner.
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Modulus has provided its exchange solution to some of the industry’s most profitable digital asset exchanges, including a well-known multi-billion-dollar cryptocurrency exchange. Over the past twenty years, the company has built technology for the world’s most notable institutions, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“Having a cybersecurity agency being the registration body is a good move, and it should be a path that more countries follow. Putting together regulations to end money laundering and pump-and-dumps, and all of those kinds of nefarious deeds is necessary. But that’s dealing with only a small part of the industry’s issue. The larger, more long-term issue will be how the industry handles hacks that cost hundreds of millions. What happens when those hacks hit institutional investors? The time to deal with this problem is now, and Ethiopia could be on to something,” offered Gardner.