The heart of DeFi beats strongest where traditional finance fails. In Africa, that’s been true for decades. It’s a pattern we’ve witnessed in communities leapfrogging past systems, constructing new and far more expensive financial realities with crypto. Today a new kind of storm is brewing, one that flows in the opposite direction from the West – TradFi’s on-chain migration, driven by US crypto policy. I, Thabo, expressing concerns about its influence on the African DeFi scene. Will it make us fly, or drown us in overreach and nationalization?

Will TradFi's Embrace Be Inclusive?

Let’s be clear: the potential is massive. Just picture the kind of liquidity that BlackRock, JPMorgan and the rest could bring to African DeFi projects. Consider the new opportunities opened up for entrepreneurs who are busy creating solutions fine-tuned to our unique needs. The US policy, with its push for regulatory clarity, could create a safer environment for institutional investment, potentially unlocking billions in funding for African innovation.

Here's the harsh truth: history isn't on our side. As COVID showed us, climate policies too often driven by agendas in Western capitals can have downstream effects that harm developing countries. Will Biden administration crypto policy be different this time? Or will it lead to TradFi giants monopolizing the African DeFi landscape? If true, this could squeeze local startups out, worsening inequalities that already run deep.

One bill — the so-called GENIUS Act— focuses largely on establishing a regulatory framework for stablecoins. That sounds good on paper. Alternatively, could its proposed compliance requirements be so burdensome that only the large, well-funded institutions will be able to successfully navigate them? Or will it lead to a more level playing field? Most importantly, will it serve the everyday African user, the one whose need for access to stable and recognizable currencies is dire? Or will it simply create more hurdles?

Consider this: a small fintech startup in Lagos, building a DeFi platform to provide microloans to farmers. They’re passionate, innovative, and deeply rooted in their community. They don’t have the resources to figure out the complex regulatory world that the GENIUS Act will likely set up. Will they have any chance of competing with a multinational bank that’s just tokenizing its existing loan portfolio?

The US too is calling for greater regulatory clarity, and that’s a good thing. Clarity should not be achieved at the expense of discouraging innovation. The fear is that the focus on TradFi's on-chain movement will inadvertently favor large institutions, leaving African startups in the dust.

Innovation or Institutional Domination?

Think about it this way: the old financial system often favors those who are already wealthy and powerful. If these US policies leave behind large communities inside of the United States, will DeFi—supercharged by these policies—just recreate those inequalities on-chain? Or will it actually democratize finance, opening up access to people everywhere, no matter their education or address?

We should be cautious about the “walk-before-run” approach that TradFi companies are taking. While this skepticism is warranted, it can be cover for upholding the status quo. Legacy systems are comfortable. True innovation is only achieved when we embrace risk, experimentation, and the willingness to disrupt the existing order. The question is whether those TradFi firms, in keeping with their inbuilt conservatism by nature, will be open to that type of innovation.

TradFi coming to DeFi is not a matter of if but when. Yet Africa need not be an innocent bystander. We can – and should – proactively seize the baton to determine what DeFi will look like on our continent.

Africa Must Claim Its DeFi Destiny

The potential is there. Together, we can build and implement a financial system that works for all – really. It’s an opportunity to deliver power to the people on a continent where needed. It’s not too late, but we have to move urgently and decisively.

Remember, this isn’t just a tech story — it’s a story about the future we want. We need to ensure that DeFi meets its potential. It needs to bring greater financial inclusion, economic empowerment, and innovation to all Africans, and not just a privileged few. The stakes couldn’t be higher, and the time to act couldn’t be more urgent. Don’t allow others to determine your future. Come help us make this DeFi future happen on our own terms.

  • Engage with policymakers: African policymakers need to understand the implications of the US crypto policy and engage with their US counterparts to ensure that our voices are heard. We need to advocate for policies that promote equitable access to technology and opportunity.
  • Support local innovation: We need to invest in African DeFi startups, providing them with the resources and mentorship they need to thrive. We need to create a supportive ecosystem that fosters innovation and experimentation.
  • Promote cross-border collaboration: We need to build bridges between African and US DeFi communities, fostering knowledge sharing and collaboration. We can learn from each other's experiences and work together to create a more inclusive and equitable DeFi ecosystem.

The potential is there. We have a chance to build a truly inclusive and equitable financial system, one that empowers individuals and communities across Africa. But we need to act now, with urgency and determination.

This isn't just about technology; it's about our future. It's about ensuring that the promise of DeFi – financial inclusion, economic empowerment, and innovation – is realized for all Africans, not just a select few. The stakes are high, and the time to act is now. Don't let your future be decided by others. Join the conversation and let's shape our own DeFi destiny.