Is this Trump’s good-faith attempt to lead the innovation charge with his renewed embrace of crypto? Or is he just setting a devilishly clever snare, with Africa as the lure? We must begin by considering this major question. This is doubly true for those of us who want to see fair markets and a level playing field out there. The end of the NCET and the SEC’s review of crypto regulations under Acting Chair Uyeda might sound like just more bureaucratic reshuffling. For African economies, the impact could be catastrophic.

Deregulation's Siren Song

The promise of deregulation is always seductive. Less red tape, more freedom, right? That sweet siren song can lead you right into the danger zone. Particularly if your topic is the quickly changing, often precarious world of cryptocurrency. The Trump administration argues that the Biden administration's approach was "reckless regulation by prosecution," but what's reckless about protecting vulnerable investors from scams and fraud?

Think about it. Given the African continent’s exploding mobile penetration and huge unbanked population, it’s a key target for crypto adoption. It’s an open invitation for abuse, too. We already know that looser regulations in the US will increase opportunities for such bad actors. They will lure African investors with crypto pump-and-dump schemes, Ponzi schemes masquerading as decentralized finance (DeFi) platforms, and even plain old theft. We’ve previously witnessed the PoisonSeed phishing campaign against Coinbase and Ledger users. Now picture that campaign magnified, deliberately targeting protected classes with limited access to information and resources.

Economic Destabilization Imminent?

Unregulated crypto markets are inherently unstable. We've seen these kinds of collapses in the past, and we will continue to see them in the future. The issue is these collapses are not limited to the crypto ecosystem. They bleed into the real world, where they ruin lives and harm economies. For African nations with pre-existing fragile economies, a big crypto crash as a result of deregulation could be devastating. In addition, it would destabilize their currencies, wipe out small-scale savings and savings-related investments, and set back development efforts by decades.

With 400,000 FTX creditors about to lose billions because of KYC’s inability to protect from fraud, the FTX saga is an ominous warning. How many would-be African investors are lured in by the promise of “get rich quick” schemes? When that next crypto exchange goes under, how many will be left holding the bag?

Fueling Financial Crime & Corruption

The Administration’s effort to mitigate crypto oversight is perhaps most puzzling when considered in the context of the fight against financial crime and corruption. The US Department of Justice claims its enforcement efforts will focus first on crypto-related crimes associated with terrorism and drug cartels. The reality is that all financial crimes flourish in the dark, under the radar of no oversight.

With their pseudonymous features, cryptocurrencies can be leveraged to launder money, evade sanctions, and finance illegal activities. By weakening regulations, the Trump administration is essentially opening the door wider for criminals and corrupt officials to exploit the system. This greatly undermines attempts to build the ethos of good governance on the continent. Corruption continues to be a serious impediment to development in the region.

Isn’t this what crypto was supposed to do for African entrepreneurs and improve financial inclusion? Yes, it could. But only with appropriate safeguards. A free-for-all, Wild West approach will work well only for the wealthy and powerful while putting the most vulnerable in harm’s way.

The promise of open blockchain access, as championed by the Trump administration, is empty if it comes at the cost of consumer protection and economic stability.

This isn't about stifling innovation. It’s about making sure that crypto is used as a force for good rather than a tool for exploitation. We need to weigh if the change really is a path to fiscal independence. Or is it the successor to the “Hot Air Agreement”—a sordidly disguised trap that will put Africa on the backfoot. The cost of their decision is too high for them to keep quiet.

  • African policymakers need to be proactive. They need to develop clear and comprehensive regulatory frameworks for cryptocurrencies, prioritizing consumer protection and financial stability.
  • International cooperation is essential. African nations need to work with international organizations and other countries to share information, coordinate enforcement efforts, and combat cross-border crypto crime.
  • Education is key. African investors need to be educated about the risks and opportunities of cryptocurrencies, so they can make informed decisions.

This isn't about stifling innovation. It's about ensuring that crypto is used as a force for good, not as a tool for exploitation. We need to ask ourselves if this shift is truly a path toward financial freedom or a carefully disguised trap that will ultimately leave Africa holding the bag. The stakes are too high to remain silent.