Towards Cryptocurrency Adoption in Tanzania: Potential Risks and Challenges to the Financial Ecosystem

Abstract

The emergence of cryptocurrency financial technology in the world has introduced new global cashless payment system. Researchers, scholars, jurisdictions, central banks and governments all over the world has put much attention in this payment technology. Despite the enormous benefits of cryptocurrency, it has been associated with several risks and challenges including high price volatility, security vulnerabilities and the illegal activities such as money laundering, terrorist financing, corruption and fraud. Moreover, the level of acceptance and adoption of this currency is questionable among the public and especially in the financial sector. This study uses the Unified Theory of Acceptance and Use of Technology (UTAUT), to assess the level of adoption, anticipated risks and challenges. The study used the mixed research design with a qualitative embedded design. The study collected data from 100 respondents obtained through convenient sampling approach. Respondents were sampled from BOT and Commercial banks based in Dar Es Salaam, Cryptocurrency traders among others. Data were analysed by the use of descriptive (quantitative data) and content analysis (qualitative data). Findings reveal that, the rate and intention of adopting cryptocurrency is very low because of ICT related challenges. It was further revealed that in Tanzania, volatility of the currency, security problems and awareness among customers are anticipated challenges. Moreover, it was revealed that because of regulatory landscape and its connection to security threats the public considers cryptocurrency to have several challenges. The study concludes that the rate and intention to adopt cryptocurrency is still low in Tanzania and recommends the government and other financial institutions in the financial sector to set facilitating environment for cryptocurrency because it is a technology that is taking over in the finance sector in the near future.