The collapse of FTX and subsequent calls for tougher regulation by the likes of U.S. Senator Elizabeth Warren have increased the likelihood of regulators adopting even stricter crypto laws. In Africa, crypto industry participants warn of the unintended consequences arising from rushed and over-restrictive regulations.
The Game-Changing Role of Crypto in Africa
As the crypto industry continues to grapple with the ramifications of FTX’s collapse and the resulting loss of trust, regulators have been quick to use this incident to support their call for more stringent regulations. Opponents of bitcoin and decentralized digital assets like U.S. Senator Elizabeth Warren have blasted regulators for allowing entities such as FTX to operate outside regulation.
Compounding matters for crypto enthusiasts who may want to lobby against damaging legislation is the impression that crypto entrepreneurs are not bound or guided by any known code of conduct. Critics of the industry believe this lack of rules or ethics is what motivates scammers, and those with an insatiable desire for high-risk trades, to experiment with customer funds.
Yet, when these experiments and gambles fail to pay off, the investors often lose everything while the culprits like Sam Bankman-Fried — founder and CEO of FTX — play the video game Storybook Brawl which he says helps him to “unwind a bit.”
Many in the crypto industry now fear the collapse of FTX will see regulators around the world use this as a pretext for installing tougher regulatory regimes which may stifle innovation.
In Africa, where FTX had a minimal footprint, commenters believe regulators there are likely to use the crypto exchange’s collapse as justification for refusing to regulate or for banning crypto entities altogether. This will be despite crypto assets’ game-changing role in Africa’s remittances and cross-border payments arena.
To understand the African crypto and blockchain industry’s perspective, Bitcoin.com News spoke to several industry participants from the continent including Senator Ihenyen, the president of the Nigerian lobby group Stakeholders in Blockchain Technology Association of Nigeria (SIBAN). Ihenyen said it is correct to believe that the global crypto industry is headed for an era that is characterized by even tougher regulation, and more skeptical governments.
Tougher Regulation Leads to Reduced VC Funding
However, Ihenyen said while it is understandable that politicians like…