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Top1. Introduction
Recent literature shows the attention on cryptocurrencies as a form of online payment (Agbo & Nwadialor, 2020; Hernadez, 2017; Lindman, Rossi & Tuunainen, 2017). In Africa, cryptocurrencies are gaining popularity as more consumers adopt information and communication technologies (ICTs) and are able to pay for products and services over the Internet (Kesa & Mahoro, 2019; Odero, 2018). Several African countries are using cryptocurrencies, e.g., Ghana, Zimbabwe, Benin, Mali, Togo, Burkina Faso, Guinea-Bissau, South Africa, Botswana, Uganda, and Tanzania, despite the absence of laws and regulations (Norman-William, 2018). Thus, cryptocurrencies provide an additional means of transacting electronically.
Governments in developing countries have expressed both optimism and worry about adopting cryptocurrencies when considering financial regulations (Agbo & Nwadialor, 2020; Sherlock, 2017). On one hand, it is perceived that cryptocurrencies can address financial inclusion by providing a fast, accessible, and affordable means of payment for goods and services (Mazambani & Mutambara, 2019; Nseke, 2018). Furthermore, cryptocurrencies can be used in rural communities for remittances to support the unbanked members of those communities. Cryptocurrencies can be used as a means of payment in cash transfer programs to reduce vulnerabilities. Cryptocurrencies can be accessed using a mobile device from remote and rural locations without the need to travel to the business premises of financial services providers (Kesa & Mahoro, 2018; Joo, Nishikawa & Dandapani, 2019; Odero, 2018). On the other hand, cryptocurrencies are independent of government regulations. They operate outside the supervision of financial regulatory institutions, e.g. central banks (Agbo & Nwadialor, 2020). Hence, some members of society use cryptocurrencies for moral hazard activities like extortion, financing of criminal activities, making illegal payments, etc. These activities increase cryptocurrency users' financial risks (Andoni et al., 2019; Nseke, 2018). From these examples, it is important to engage in this debate and understand the benefits and risks associated with cryptocurrencies in the context of African countries. Consequently, understanding cryptocurrencies can support governments in developing appropriate strategies for regulating the financial services environment and use of cryptocurrencies (Kesa & Mahoro, 2018; Norman-William, 2018; Sherlock, 2017).
While there are studies that have looked at cryptocurrencies in areas of legislation and regulations (see Branco & Branco, 2019; Morency, 2018; Odero, 2018; Sherlock, 2017), insights from African countries remain low. There is limited understanding of how legislation and regulations can support the application and use of cryptocurrencies in the context of Africa (Giaglis & Kypriotaki, 2014; Lindman, Rossi & Tuunainen, 2017). This study aims to highlight this important but ignored area of research, providing insights into the case of Malawi. The country represents a low-income status economy in Africa (UNDP, 2019). Such a country is an interesting case where cryptocurrencies can support financial inclusion and economic development (Agbo & Nwadialor, 2020; Nseke, 2018).