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The Role of Cryptocurrency in Reshaping Global Finance
As cryptocurrency continues to evolve from a niche interest to a significant financial tool, its potential to reshape traditional global economic hierarchies is becoming evident.
Global Financial Shifts
Tensions are rising as the world’s superpowers vie for security, prosperity, and influence. From sanctions and financial infrastructure weaponization to the legalization of Bitcoin and the acceptance of crypto for global trade settlement, the financial system is undergoing profound changes.
Adoption and Innovation
El Salvador’s adoption of Bitcoin as legal tender is a clear example of this transformation. In China’s Greater Bay area, under the banner of web3, a new financial paradigm is emerging. Meanwhile, significant changes are also happening across Africa, although they receive less attention. In terms of venture capital, Africa’s share of global blockchain venture funding was just 1.3% in 2023 and only 0.6% during the first half of 2024. By contrast, the US secured 47% of the global blockchain VC pie.
Blockchain-Powered Economic Advancement in Africa
Africa’s economies, with their complexity and diversity, provide fertile ground for crypto-backed innovation. The core tenets of blockchain—efficiency, transparency, and disintermediation—are powerful tools for addressing these challenges. Blockchain offers a unique opportunity to leapfrog legacy systems and bypass infrastructure inefficiencies.
Financial Services Industry
Many individuals and businesses across the continent are unbanked or underbanked, and cryptocurrencies are increasingly bridging this gap. They drive grassroots economic activity and integrate informal sectors into the formal economy, leading to better access to credit, improved business practices, and enhanced economic stability.
Fintech and Traditional Financial Services
Traditional financial service providers and fintech companies are increasingly seeking to offer crypto services to their customers. They turn to crypto exchanges for liquidity and infrastructure. It won’t be long before millions across Sub-Saharan Africa have easier access to stablecoins like USD Coin, enabling them to save in a stronger currency than what’s locally available.
Powering Start-Up Innovation
Across Africa, innovative start-ups are leveraging crypto to address adoption challenges. However, scaling these solutions remains a significant challenge without adequate venture capital.
“Securing Africa’s largest-ever crypto VC-raise has enabled VALR to invest heavily in industry-leading technologies that are now offered to over 1,000 corporate clients and over 800,000 retail customers worldwide.”
With the right financial backing, more African blockchain projects can contribute to local economies while sharing their expertise globally.
The Importance of Regulatory Clarity
While the potential for blockchain and crypto in Africa is vast, regulatory uncertainty has been a barrier to greater VC funding. However, this is not a universal trend. South Africa, for example, has taken a proactive approach to regulating the sector. With a clear regulatory framework, South Africa has over 100 licensed crypto companies. In 2023, the country secured 21% of all blockchain venture funding in Africa.
African countries embracing crypto with clear regulations are reaping the rewards. South Africa’s licensed crypto companies generate significant tax revenue and provide employment opportunities globally. The remote-first ethos of blockchain companies creates valuable export opportunities, opening up South African technological innovation and financial services expertise to a global audience.
The Path Forward: Embracing the Crypto Opportunity
Africa’s challenges and complexities mean it stands to benefit significantly from blockchain innovation. Yet, the level of VC funding doesn’t yet match the opportunity. Venture capitalists should not overlook Africa in favor of more developed markets. Despite challenges, there is vast potential to invest in blockchain projects that could transform the continent’s growth trajectory while delivering returns.
African regulators need to embrace the crypto opportunity rather than resist it. Local currencies, such as the Nigerian Naira, are losing favor and may become worthless. Crypto offers African countries a chance to gain a stronger foothold in global economic rankings.
By providing a clear and supportive regulatory environment, African nations can attract the venture capital needed to scale blockchain innovations, create jobs, and propel economic advancement across the continent.
Ben Caselin is the chief marketing officer at VALR, the largest crypto exchange by trade volume on the African continent. Headquartered in Johannesburg, VALR serves over 1,000 corporate investors and more than 800,000 traders worldwide. Drawing on years of experience in the digital asset space, Caselin is frequently cited and published in top-tier media and is an avid speaker at global conferences.
