The State of Oregon just threw a legal haymaker at Coinbase, claiming they’re in violation of securities laws. At first glance, that sounds reasonable—protect investors from all these unregistered crypto assets. But scratch the surface, and you'll find a potential domino effect that could cripple crypto innovation and adoption where it's needed most: Africa.

The lawsuit, led by Attorney General Dan Rayfield, centers around the claim that Coinbase sold unregistered securities, leading to investor losses. The ICP (Internet Computer Protocol) price crash in the days following its launch on Coinbase is held out as perhaps the most illustrative example. Rayfield underscores the consumer protection aspect, noting the dangers associated with unregistered securities and the possibility that projects are just a “get rich quick, pump-and-dump scheme.” All valid concerns, right?

Maybe not entirely. Whatever the answer, Oregon is clearly doing something right to protect its residents. Now imagine the effect on a continent where crypto is not just a speculative asset but a lifeline.

Behind the scenes, Africa is emerging as an unexpected leader for global crypto adoption. Why? Because conventional financial systems have let down its community. Remittances are expensive and slow. Cross-border payments are a nightmare. Today, millions are unbanked, barred from access to the formal economy. Crypto can provide that solution, that hope for financial inclusion.

Africa's Crypto Revolution at Risk?

Sometimes powered by blockchain, mobile money is changing lives. It allows startup and small businesses to flourish while allowing American families to transact and ultimately receive the money they need from overseas. Thanks to decentralized finance (DeFi) platforms, anyone with an internet connection is gaining access to loans and other financial services once out of reach. These aren’t just ethereal ideas — these are everyday solutions making a tangible difference in the lives of everyday people.

Next, picture the scenario in which African regulators, frightened by the Oregon lawsuit, move to adopt damagingly stringent regulations. Regulations that produce the exact outcomes that Congress is attempting to achieve with moves to deregulate here in the US. What happens? Innovation gets choked. Legitimate crypto businesses are driven underground. And, understandably, consumers are left more vulnerable to scams because the regulated channels are closed off.

  • Remittances: Lower fees, faster transfers than traditional methods.
  • Cross-border Payments: Streamlined transactions for businesses and individuals.
  • Financial Inclusion: Access to loans and investment opportunities for the unbanked.

Oregon’s ethically motivated lawsuit, intended to shield vulnerable investors, risks shuttering an entire continent that is working hard to become more financially independent. We’re not just talking about the potential for stifling a nascent industry, we’re talking about stifling an industry that truly provides solutions to real-world problems.

Unintended Consequences Loom Large

This fear of the unknown, further stoked by instances such as the ICP price crash, would cause panic-driven reactions. Politicians and regulators, under pressure to “do something,” are going to pass legislation that is often more reactionary than forward-thinking. This is where the outrage should be directed: at the potential for well-meaning policies to have devastating consequences.

The irony is inescapable. Regulating too harshly could push crypto activity into the shadows, making it harder to protect consumers from the very risks Oregon is trying to prevent. It’s the equivalent of trying to fight a fire with gasoline.

So, what's the answer? Not a free-for-all, certainly. Investor protection is crucial, everywhere. A one size fits all approach, copying Western regulations for the sake of it, will be a disaster for Africa.

A Call for Nuanced Regulation Now

African regulators should definitely take a lesson from the Oregon example, but they should take a more graduated view. This means:

Just to be clear, this is not an argument in favor of calling for reckless deregulation. Most importantly, it’s understanding that the stakes really are different in Africa. We believe that crypto, when used thoughtfully, can be a transformative force for good. Unfortunately, restrictive regulations may waste this historical opportunity.

  • Regulatory Sandboxes: Creating safe spaces for crypto startups to experiment and innovate.
  • Tiered Licensing Regimes: Allowing different levels of regulation based on the type and scale of crypto activity.
  • Education and Awareness: Empowering consumers with the knowledge they need to make informed decisions.

The SEC throwing in the towel on its case against Coinbase and reassigned the lead lawyer should be the first clue. Another signal that this is a nuanced issue without simple solutions. It just may be a signal that this heavy-handed top-down regulation isn’t the answer.

This is the time for Africa to be in a constructive and collaborative dialogue—a dialogue between public policymakers, local entrepreneurs, and the global crypto community. An honest dialogue that values investor protection, but values innovation. A candid conversation that responds to the specific challenges and opportunities in front of the continent.

We shouldn’t let Oregon’s lawsuit, no matter how well-intentioned, dampen Africa’s crypto potential. The stakes are simply too high.

Let's not allow Oregon's lawsuit, however well-intentioned, to cast a shadow over Africa's crypto future. The stakes are simply too high.