And then, sure enough, the Federal Reserve—doing its best impression of a well-meaning colossus– is prepared to “support liquidity” during a crypto market meltdown. Don’t worry, Boston Fed President Susan Collins promises us—they’ve got the tools to intervene if things get dicey. But before we pop the bubbly in exuberance, let’s take a look at who this pledge actually helps. And more importantly, who it leaves behind. Hint: it's more than a few million people.
Whose Liquidity Are We Talking About?
Do we honestly believe that the Fed is primarily concerned with the financial health of crypto traders in Nigeria, Kenya, or South Africa? It’s difficult to accept that their highest priority. Let’s be realistic. That’s because the Fed’s actual mandate is to defend the US economy. Spillover benefits to developing nations are entirely coincidental—if they happen at all.
The intervention’s promise would instead go toward stabilizing the fortunes of rich Western investors. In reality, it does very little to solve the pressing issues impacting African crypto markets. We're talking about entirely different playing fields. In the United States, perhaps you are concerned about the recent drop in value of your Bitcoin. In Africa, people are using crypto to circumvent broken banking systems, escape hyperinflation, and build a financial future in the face of crippling economic instability.
The Fed’s monetary policy tools – interest rate adjustments, QE – are blunt instruments. Instead, they are meant to plug the gaps of systemic risk in advanced economies. They don’t have the precision required to hone in on the adaptive needs of emerging markets. Additionally, they fail to address the specific regulatory and infrastructural obstacles African crypto enterprises face on a daily basis.
A Strong Dollar Drowns African Dreams?
Think about this: what happens if the Fed's intervention leads to a stronger dollar? This logistics nightmare obfuscates a grim reality—that African businesses now pay substantially more than their global counterparts to import goods. It further raises the burden of dollar-denominated debt and likely spurs capital flight as investors head for safety in US markets. It’s a perfect example of how Western policy decisions can have unintended and usually detrimental effects on the Global South.
We need to remember the context. This is a particular problem for many African nations already struggling with currency depreciation and lack of access to international capital markets. A Fed-induced dollar surge would worsen these issues, undermining the crypto-financial inclusion that proponents love to brag about. Creating a liquidity support program with a promise to serve as a backstop rings hollow when the deeper causes of inequality and systemic disadvantage continue to grow.
It’s comparable to applying a band-aid to an individual who’s bleeding to death. While this may be preferable for your mental health, it doesn’t address the underlying issue.
CZ, SEC, and the Forgotten Continent
While the US regulatory landscape continues to evolve (with the SEC's Mark Uyeda proposing temporary crypto frameworks, and former Binance CEO CZ dealing with the legal fallout from AML violations), African nations are forging their own paths. They tend to get stuck attempting to do everything because they are under-resourced. Regulatory uncertainty and the continuing impact of Western financial hegemony make their task even more difficult.
Consider the irony: CZ, after serving time for AML violations, is now a free man. However, at the same time, millions of Africans are still facing the provider challenges–driving many to crypto as a safety net. However, the story is often overshadowed by events in the US and Europe. The issues and concerns of African crypto users are too often pushed aside.
The SEC’s recent crypto roundtable —exploring custom regulations for crypto trading — featured executives from Uniswap Labs, Coinbase, and Cumberland DRW. Notice anyone missing? Where are the delegates from African crypto exchanges, or the entrepreneurs creating blockchain solutions for their local communities. They are, as always, missing from the table.
Though well-intentioned, the Fed’s proposed actions would play into this dynamic. They care about the stability of the Western financial system, even if that comes at the cost of developing nations. They’re quite ready to lend a sharp elbow on behalf of their conception of “liquidity.” Not the kind that really helps the most vulnerable.
The next time you hear about the Fed riding to the rescue of the crypto market, ask yourself: who is really being saved? And most importantly, who’s getting left behind to forge ahead through the rough waters on their own? Don't be fooled by the false dawn. The long-term success of crypto in Africa will rely on African solutions, not the dictates of esoteric Western central bankers.
