The opportunities and obstacles for Morocco's new crypto market

After a five-year-long ban, Morocco is finally ready to embrace the cryptocurrency trade, Morocco’s central bank announced in December last year.

"The general principle for issuing this law remains ‘not to limit innovation and protect citizens from the various risks associated with the field’,” said Abdellatif Jouahri, the governor of the Central Bank of Morocco, or Bank Al-Maghrib (BAM), in a press conference on 22 December.

The central bank’s announcement has thrilled Moroccan crypto-enthusiasts, who have believed for years in the economic potential that cryptocurrencies could unlock in the north African country, despite being banned. 

“It is promising that Bank Al-Maghrib is taking steps to regulate cryptocurrencies. This regulation will significantly benefit both individuals and businesses [that use crypto],” Soufian Keiber, a Moroccan crypto-enthusiast, said.

In 2017, Morocco banned the holding and trade of all digital assets and virtual currencies, as the market was seeing major growth.

"The central bank's announcement has thrilled Moroccan crypto-enthusiasts, who have believed for years in the economic potential that cryptocurrencies could unlock"

This was the year when most states took notice of digital currencies, with many issuing warnings against the “unregulated and volatile” assets.

Cryptocurrencies, the most notable of which is Bitcoin, are decentralised digital currencies that you can buy, sell, and exchange directly, without an intermediary like a bank. Instead of a bank account, you use a digital wallet with easy access through your phone.

So far, the United Arab Emirates (UAE) is the only country in the Middle East and North Africa that has issued an official regulation of digital currencies.

Despite the official ban on virtual currencies, Morocco has become the crypto hub of North Africa in the past few years. The ban has failed to curb Moroccan crypto-enthusiasts' appetite to join the extremely volatile trade, where becoming a millionaire and going bankrupt are both real possibilities.

The North African Kingdom recorded a Bitcoin trading volume of $6 million in 2021. It is positioned 24th in the world and 4th in the African continent, behind Nigeria, South Africa, and Kenya. A 2022 report indicates that 4% of Moroccans own cryptocurrencies.

Facing the hiking crypto trade, the Moroccan central bank concluded that it might be time to accept that crypto is here to stay. 

“Seriously, when cryptocurrencies started to take over the world, we were quite suspicious,” said Adil Zbir, Head of Financial Market Infrastructure and Payment Systems Monitoring at BAM, in July.

During the past year, Morocco's central bank has held several meetings with regulators, such as the Insurance Supervisory Authority and Social Security (ACAPS), the International Monetary Fund (IMF), and the World Bank, in order to build new regulations.

In July, BAM announced that it had started drafting a bill that would define cryptocurrency in a manner that is “adapted to the Moroccan context” and would protect individuals while not constraining innovation. 

The announcement came only a few days after Changpeng Zhao, the founder of Binance, one of the most important cryptocurrency exchange platforms, met the head of BAM, Jouahri. 

So far, there’s little information about the much-awaited draft. 

However, Moroccan lawyer Soufiane Segame explained that the promised regulation can hardly be more restrictive than the current legislation, which outlaws the crypto trade altogether.

He expects the bill to include provisions for issues such as, "mandating a licence for crypto traders and forcing compliance with local laws relating to the fight against money laundering and the financing of terrorism under penalty of substantial fines or custodial sentences".

“The consecration of a regulation of cryptocurrencies would be a guarantee of security and would be intended to reassure investors, facilitate the creation of technological infrastructures that generate employment in the sector of digital assets, as well as the reduction of cybercrime and fraud,” Segame told The New Arab.

"Today, many Moroccan crypto-enthusiasts are ready to give up their anonymity to ensure a state-regulated safety net"

However, such regulation may end one of the cryptocurrencies’ most appealing promises: anonymity.

When first launched, digital currencies promised anonymity and secrecy for their users, a revolutionary economy where the state and its institutions no longer watched or controlled the traders.

Cryptocurrencies are built on a distributed digital record called a blockchain. As the name implies, blockchain is a linked body of data, made up of units called blocks containing information about each transaction, including date and time, total value, buyer and seller, and a unique identifying code for each exchange.

However, the price paid for this form of database by crypto users was hefty, with a high risk of volatility and endless scamming incidents.

Today, many Moroccan crypto-enthusiasts are ready to give up their anonymity to ensure a state-regulated safety net.

“By establishing clear rules and guidelines for their use, it can help to reduce uncertainty and risk for individuals and businesses. This can make it easier for people to trust cryptocurrencies, knowing that there is a regulatory framework in place to protect their interests,” Soufian Bekir, a Moroccan crypto-enthusiast, told The New Arab.

Today, around 40% of Moroccans have access to banking services. Crypto-enthusiasts argue that this population would be greatly served by a low-cost, real-time digital peer-to-peer cash system like Bitcoin.

However, official regulation may not push the average Moroccan to join the crypto trend.

Speaking to Moroccan vendors, employees, and members of the public, they all ask one question: what is crypto?

“No, I need to go to the bank and get my money in my hands to know that it’s real. I don’t trust technology with money,” Aissa, a 53-year-old Moroccan shop owner, told The New Arab.

"Speaking to Moroccan vendors, employees, and members of the public, they all ask one question: what is crypto?"

“That [crypto] sounds like gambling to me. I barely trust the bank and they want me to use some fictional tender,” said Mouhssine, a Moroccan teacher. 

Though there are no official numbers on the levels of trust towards cryptocurrencies in Morocco, the virtual assets are facing a global crisis of confidence, with only 5.6% of the US and UK populations trusting them as a safe investment.

While introducing state regulation may have a positive impact in achieving higher levels of trust among the population, it is likely that cryptocurrencies still have a long way to go in being widely accepted by Moroccans from varied walks of life.

Basma El Atti is The New Arab's correspondent in Morocco.

Follow her on Twitter: @elattibasma