African governments’ failure to provide jobs fueling youths’ interest in Bitcoin business
Jude Ogene is the Deputy General Counsel of Paxful, a peer-to-peer fintech platform built to provide equal access to cyptocurrency traders. Ogene, who leads the company’s initiatives with respect to product support, litigation management and corporate/commercial transactions, in this interview with The Guardian, explains the state of digital currencies in Nigeria.
Bitcoin has become the new gold for African youths, what would you say is fueling their interest and passion?
Africa’s median age is 19.7 years, and trending lower. Just think about that for a second! It is a continent of 1.4 billion young people, most of whom are digital natives. There are three main things fueling their interest in Bitcoin: (1) the continuing failure of African governments to provide opportunities for their citizens to secure employment or engage in entrepreneurship; (2) related to the first, which is the depreciation of these countries’ local fiat currencies – in the 1980s, the Nigerian currency (the naira) traded at parity with the U.S. dollar; now it takes close to N600 to buy one dollar; and (3) due to the rise of mobile telephony and apps, African youths are used to having the world at their fingertips. With Bitcoin, they have the opportunity to transact 24/7 and send/receive money cheaply and almost instantaneously from all over the world. The combination of these factors contributed to Africans’ appetite for Bitcoin and peer-to-peer platforms.
It is said that Bitcoin plays critical role in boosting Africa’s economic prosperity, how is this so?
It does so in several ways. First, combined with the rise of remote work, Bitcoin will make it possible for world-class talent in Africa to take advantage of global work and entrepreneurial opportunities. Second, Bitcoin will usher in frictionless payment and trade rails across all of sub-Saharan Africa. This is particularly important because of the Africa Continental Free Trade Agreement (AfCFTA), which is intended to establish a free trade zone across all of Africa, and which the World Bank estimates will boost Africa’s income by $450 billion.
And third, Bitcoin will facilitate remittances from Africans in the diaspora. In its Foresight Africa 2022 report, The Brookings Institution noted that cryptocurrencies have a lot of potential to facilitate remittances and help democratise finance. That is our raison d’etre here at Paxful – as a peer-to-peer platform; we are fully on board with Satoshi Nakamoto’s vision of Bitcoin as a way for users to exchange value among themselves without a centralised authority in the middle.
There are fears that Bitcoin is vulnerable to criminal acts. What legal and policy framework should African governments consider to mitigate illegal use of the digital currency?
First, let’s disabuse a misconception. The immutable nature of a blockchain makes it easier – not harder – to detect Bitcoin crimes and scams. There is literally no place to hide when funds have to move on a blockchain. In February 2022, the DOJ reported it had recovered $3.6 billion hacked from a crypto exchange in 2016, and specifically noted the public nature of the blockchain as being helpful to their investigation. Having said that, we know that criminals have continued to try to use Bitcoin for illicit purposes.
As such, it is important for African governments to have robust data privacy and protection laws. And also, to implement Know Your Customer (KYC), Anti-Money Laundering (AML) and Anti-Terrorism Financing (ATF) processes. Many African countries are moving in this direction, but others are not. Overall, I believe that the best legal and policy framework to mitigate illegality in Bitcoin is one that fully authorises and confers its legal status. As such, I applaud the Central African Republic for taking this bold step of making Bitcoin its official currency.
So, what is your firm doing to protect users and minimise risk?
Paxful goes above and beyond when it comes to KYC and AML. A highlight of the controls in place include trade chat monitoring, using machine learning, various rule based transactions and blockchain analytics monitoring, sanctions checks, digital onboarding, and ongoing cooperation with law enforcements. Additionally, we have a partnership with Chainalysis, a leading blockchain and forensics firm. We use Chainalysis Know Your Transaction (KYT) to monitor the platform’s cryptocurrency transactions in real-time and Chainalysis Reactor to build investigations when it detects suspicious activity.
What advice would you give to the Nigeria youths, who are interested in cryptocurrency and its legal frameworks?
In a word, jump in with both feet! The good thing is, I see so many young and aspiring lawyers who are interested in careers in Bitcoin. But many are uncertain about how to do so. So let me offer a few tips. First, pick an entry point – Bitcoin cuts across many disciplines: securities and commodities law, data privacy, financial regulation, cybersecurity, and so on. If you have a strong background in one, use that as the tip of your spear, so to speak.
Second, educate yourself. I took a course in blockchain strategy that opened my eyes to the possibilities of the industry. Third, and most importantly, write about issues at the intersection of law and cryptocurrencies. The industry is still in its infancy, and there are so many interesting issues that have not been explored from a legal perspective. So pick one that interests you, and educate the rest of us! And in all of this, keep in mind this important lesson from Reid Hoffman (LinkedIn founder): “We are all in permanent beta.” Meaning, take risks with your career. Be a continuous learner. Have an entrepreneurial mindset. Good luck, and Godspeed!
Why did you join the legal team of Paxful as Deputy General Counsel and what has your experience been so far?
I joined the company after several years as General Counsel of a private equity portfolio company (and before that, as outside corporate counsel). I made a career change to join Paxful because of my personal and professional interests in Bitcoin, emerging markets, and financial inclusion. I’ve been with the company since December 2021, but it already feels like I’ve been here several years! My colleagues have welcomed me with open arms. It’s been very busy, but that is just the way I like it. I couldn’t be happier.