Crypto adoption on the rise in Cameroon, amidst growing concerns of Ponzi schemes - study

Cameroon stands out with a substantial cryptocurrency user base, boasting around 900,000 individuals, which accounts for 6.76% of its active population. This information is based on a recent study on cryptocurrency and Ponzi schemes conducted by the country’s Ministry of Finance. 

Key findings

• Titled “Study on the Development of Cryptocurrency and Activities Related to the Ponzi Scheme in Cameroon,” the study sheds light on crypto-related activities in the country, revealing concerning trends and regulatory gaps.
• It found that the number of cryptocurrency users has increased significantly, mainly due to the convenience of online transactions during the COVID-19 pandemic. 
• One interesting finding in the study is the rampant presence of Ponzi schemes within the Cameroonian crypto space.
• Several cryptocurrency companies follow the Ponzi scheme pattern in Cameroon, resulting in losses, it read.
• Per the study, of the individuals surveyed, only 737 respondents (39.3%) claim to have received a contract, and 89% said they reviewed it before signing. 
• This lack of formal agreements has allowed platforms to operate without constraints, potentially jeopardizing the interests of investors, the report read.
• The Ministry accused the Central African Financial Market Supervisory Commission (COSUMAF) of not providing definitive guidance on digital tokens and assets, leaving the regulatory environment uncertain.
• It suggests a clarification of terms and establishment of regulations to protect investors and ensure financial stability.
• The study also suggests identifying and closing down Ponzi schemes, formalizing regulations, and increasing public awareness about crypto risks. 

Key quote 

“Additionally, numerous companies are thriving in offering cryptocurrencies and investment products, some of which follow the PONZI scheme pattern in Cameroon. 

“In the absence of regulation, they attract a significant clientele due to advertising and promises of rewards, which, in most cases, result in the loss of public savings.”

Methodology

• 18 cryptocurrency companies were surveyed for the report. The companies mainly provide investment advice, facilitate online buying and selling of crypto and manage crypto portfolios. 
• The total population studied consists of 1,872 individuals, including 1,190 males (63.6%) and 682 females (36.4%). 
• A majority respondents fall within the 20 to 30-year-old age bracket, with a significant portion holding higher education degrees. However, most investors have modest incomes, with only a tiny fraction earning over 500,000 FCFA monthly. 

Zoom out

• In July, Mariblock covered an incident where unsuspecting Kenyan citizens fell victim to a fraudulent scheme operated by BTCM Kenya.
• The scheme encouraged users to deposit funds for supposed Bitcoin mining investments, with the promise of up to 350% ROI within a short period.