Cryptocurrency regulation in Morocco, as some rejoice, others remain skeptical

Omar B., a 35 years old math teacher and a small crypto-trader in his spare time, is one of a million people who own cryptocurrency in Morocco, navigating the international financial tech novelty in the midst of an unregulated domestic market.

Moroccan crypto traders represent 2.4% of the population, and that number has been on the rise since 2020, when peer-to-peer Bitcoin transactions had reached a record high of MAD 2.18 million.

The overall trading volume of Bitcoin in Morocco is estimated at USD 6 million, making the country the first crypto hub in North Africa and the fourth on the continent.

“Things have generally been good for me since I started getting paid with Bitcoin in 2020, during the lockdown,” explains Omar, his eyes scanning Casablanca’s white French architectural remnants in front of him as he dives into his memory at a small local café.

“I am one of the many contractual teachers in Morocco, which means the situation wasn’t favorable to me during 2020 specifically, so I started looking for alternative incomes,” he tells Hespress EN.

The infamous 2020 lockdown pushed many people to start using cryptocurrencies, especially Bitcoin. LocalBitcoins, a leading trading platform, reported a 30% growth in Moroccan users from 2019 to 2020.

“I had a tech-savvy friend who was willing to teach me. I spent weeks trying to learn everything I could about trading and cryptocurrencies,” continues Omar.

“Of course, it wasn’t easy. This was past the heyday of crypto, and one needed a significant starting investment if they wished to make any profit at all.”

It is now agreed upon that the best period to invest in cryptocurrencies was from 2010 to 2014. That was when the market was forming and concretizing, and prices were relatively low.

However, from 2016 onwards, although fluctuations were common, the prices of worthwhile cryptocurrencies were all already soaring — Bitcoin prices, for example, had risen from USD 434 in January 2016 to USD 998 in January 2017.

“My friend directed me to platforms where I could find work and get paid with cryptocurrencies,” recalls Omar, explaining: “these are platforms where you could find jobs ranging from design to teaching.”

In January 2021, he landed his first job teaching math to two siblings from the UAE. “I got on a Zoom call with their father, and we discussed the details, including the payment in Bitcoin, which was to be after every class.”

Most of Omar’s clients are from Gulf countries, seemingly rich and tech-savvy parents looking for an alternative and somewhat “futuristic” way to finance their children’s education.

“The main reason that attracted me to crypto is the anonymity. It is completely untraceable, free of all human intervention, and, of course, no banks!” says Omar. “Yes, it is illegal in Morocco, but I personally think the risk is worth it, possible regulation is more worrying to me.”

Back in November 2017, Morocco banned Bitcoin and the use of any cryptocurrency, making its mere ownership illegal.
Nonetheless, earlier this year, Abdellatif Jouahri, Bank Al-Maghrib’s Governor, disclosed Morocco’s central bank is working on a joint framework to regulate cryptocurrencies in the country.

The regulatory framework was drafted through talks between the International Monetary Fund (IMF), Bank Al-Maghrib (BAM), the World Bank, and several other European central banks.

“I believe regulations would go against decentralization, which is at the core of crypto. Crypto by nature is not backed by any governmental institution and can’t be treated like traditional currencies,” Omar commented on the specter of regulation.

“I think, for many crypto users, any regulation would pose a vital threat to decentralization,” which remains the most attractive component of digital currencies.

All over the world, governments are rushing to regulate crypto; others are outright banning it. Experts stipulate that regulating crypto is necessary to stabilize the market and make it safer for long-term investors. Smaller investors like Omar, on the other hand, believe this will hurt them more than help them.

“I personally am more into small peer-to-peer trading and can’t be considered a long-term investor. Generally but not always, these people are already well-off investors looking for ways to diversify their portfolios and make more money. Regulation, in my opinion, will help rich people, middlemen, banks, and governments, but not hardworking people for whom this technology was made.”

Omar is nevertheless hopeful for the future and deeply believes that concepts like cryptocurrencies and blockchain technology cannot be easily regulated and will eventually dominate the financial sphere. “A simple comparison to make would be between cryptocurrency and democracy,” he explains. “Just like democracy, blockchain and cryptocurrency are revolutionary, and we can’t unlearn them. It is not only technological but also philosophical. It will only keep spreading and getting stronger.”

Visibly satisfied with his last observation, one that is commonly used by crypto-enthusiasts around the world, he takes one more sip from his coffee before going back to his study sheets and schedules, preparing for his next lesson.

For Youcef Maouchi, a Ph.D. assistant professor of Economics at Qatar University, the legal status of cryptocurrencies globally is vague at best, hence the difficulty of finding a proper framework to regulate its use, as he told Hespress EN that “We don’t have a clear answer to what is driving cryptocurrency’s use [worldwide].”

Conflicting perspectives

The need to regulate crypto-markets has almost become an obsession for governments around the world, with institutions like the World Bank and the International Monetary Fund (IMF) multiplying summits and meetings with different governments around the world to create a clear strategy for the use of cryptocurrencies in the future.

Morocco is no exception; the need for regulation is insistently present, as recently expressed by the governor of the Kingdom’s central bank, Bank Al-Maghrib, Abdellatif Jouahri, in a press conference: “[Crypto] is not a currency. It may be an asset, but it’s speculative. If it is to be adopted, it must be framed by an international regulatory plan.”

According to Imru Al Qays Talha, a public policy and blockchain expert and fellow associate at the MIPA, Morocco “wants to wait for an international legal framework” before doing anything concerning cryptocurrencies.

Government regulation typically happens through the creation of what is called a Central Bank Digital Currencies (CBDBs). Simply put, these are currencies controlled and issued by governmental, regional, or international central banks, unlike cryptocurrencies.

“CBDBs are not blockchains and they’re by no means decentralized,” says Imru Al Qays. “It’s […] way easier to hack than a regular cryptocurrency would be.”

For a lot of crypto traders and enthusiasts, regulation is counterintuitive. The main attractive characteristic of cryptocurrencies is the decentralization and the lack of regulation.

New bitcoins, for example, are entered into circulation through a process called Bitcoin mining. Mining is the process of solving complex computational math problems using advanced software. The first computer to solve the problem receives the next block of Bitcoin, which prompts the process to start all over again. In short, mining is what legitimizes Bitcoin transactions and ensures their validity.

Other countries, like Ecuador for example, have already tried the CDBC model and “literally failed,” as Imru Al Qays points out before adding: “I think the lesson there is what is the point of a CBDC if we have bitcoin and […] blockchain.”

For the blockchain expert, this is evidently because no country will want to give up part, if not all, of its economic sovereignty. “I do believe that the future will be […] a patchwork between CDBDs, cryptocurrencies, and even internal bank settlements.

And it is going to be part of this geopolitization of Bitcoin itself […] with some countries accepting certain coins and other countries accepting their own CDBC,” he explains.