The Canadian Securities Administrators (CSA) are working towards regulatory certainty for crypto-themed investment funds. Their benevolent intervention may, accidentally, provide a death knell to the blossoming fintech ecosystem on the continent. It’s time to discuss if a one-size-fits-all regulatory approach really does serve the best interests of the global financial landscape. Does this risk stifling innovation over the very regions that stand to benefit from it the most? Are we genuinely protecting investors, or merely raising walls that stifle innovation and deter investment?
Is Regulation a Silent Killer?
The CSA’s new regulatory regime will begin on July 16, 2025. Their intent is to establish important “guardrails” for the rapidly-changing crypto environment. Fair enough. No one wants a Wild West scenario. Sometimes, guardrails become roadblocks. This is true even more so for smaller, emerging crypto funds who are trying to make their way through Africa’s complex economic environment.
Think about it. Africa, far from being the last crypto frontier, is a continent where adoption is largely fueled by necessity rather than speculation. Limited access to traditional banking, exorbitant remittance costs, and unstable national currencies have pushed many Africans towards crypto as a lifeline. Will these regulations unintentionally punish them?
It all takes me back to the wild west days of the internet. Consider if, back in the mid-90s, regulators had started putting in place strict rules based on today’s bustling telecom infrastructure. Without DARPA’s concentrated efforts to create a better internet, would Google, Amazon or Facebook even be here today? Over-regulation can easily kill nascent innovation.
Compliance Costs: A Crushing Burden
The CSA’s shift from a case-by-case approach to formal rules provides clarity, agreed— but at what cost? Compliance is expensive. Legal fees, reporting requirements … just the administrative burden itself can be crippling for startups who are already just one-up-from-a-hobby businesses.
I had a conversation with one such fintech entrepreneur in Nairobi last week – we’ll call her Aisha. She’s building a platform that will facilitate cross-border payments through crypto. What she cares most about is serving the small businesses typically gouged by legacy remittance companies. Her worry? “These regulations,” she explained, “seem like they’re written for the key, entrenched players with lots of money. We’re just really attempting to create something that’s beneficial to our community.
Aisha's story isn't unique. Just like their Asia contemporaries, most African fintech startups are undercapitalized, but they are going to bank on their speed and nimbleness and technological ingenuity. The CSA’s rules are written with a developed-market context. This approach risks creating a wall that would completely exclude these critical partners. This is not the story of wild west cowboys—this is the story of Africans looking to make their future better. Are we truly doing them a service by placing more barriers to innovation in their way?
Africa's Unique Needs Ignored?
Yet the true tragedy here lies in the unintended consequences we can already foresee. By forcing on the regulatory straight jacket, are we missing the shout out to the microcosm of the African fintech ecosystem. In doing so, are we erasing the voices of those who have the most to gain from responsible crypto innovation?
Consider this: many African countries lack robust regulatory frameworks for traditional finance. While not true in every circumstance, crypto has proven to be a more transparent and accessible option to accomplish this. Rigid rules designed for mature markets would limit competition and innovation before it starts. Thanks to blockchain technology, developing countries now have an opportunity to leapfrog more developed financial systems.
We need to ask: are we truly considering the long-term impact of these regulations on Africa's fintech future? Or are we just putting the Band-Aid solution on a much more complex problem while worsening inequalities that already exist. We need to have an honest discussion on how to encourage this type of responsible innovation while not hampering the promise and potential that new markets can bring. Time to consider a tiered regulatory approach. We can set up a regulatory sandbox environment for developing and testing new crypto products. It’s a hopeful sign that the future of African fintech—and maybe the continent’s economic future—depends on it.
