African blockchain revolution empowers unbanked

The Blockchain Africa Conference 2023, held in Johannesburg, South Africa, brought together key figures in the blockchain, crypto, and regulation sectors from around the world. During the conference, attendees discussed the instability of USDC, the world’s most widely used stablecoin, due to concerns over custodianship.

Rene Reinsberg, co-founder of Celo and president at the Celo Foundation, argued that the Silicon Valley Bank collapse made a case for custodianship. He stated, “The issue of custodianship is critical. If you are going to issue a stablecoin, you need to make sure that you have the reserves and control of the underlying assets.”

Circle, the company behind USDC, had diversified its asset holdings, but as much as 10 percent of those assets were held at Silicon Valley Bank, causing the stablecoin to depeg from its dollar value by 10 percent when the bank closed. This issue made stablecoins a significant topic of discussion during the conference.

According to the World Bank, approximately 57 percent of Africans are unbanked, meaning they lack access to formal financial services, such as bank accounts, credit cards, loans, or insurance.

Blockchain technology provides an alternative way for people to access financial services without intermediaries or high fees. As Junde Yu, head of global sales at Cobo, noted, “We believe in a world where customers are their own custodians.”

Cryptocurrencies enable peer-to-peer payments and remittances; digital wallets store value and identity; smart contracts facilitate lending and borrowing, and decentralised applications (DApps) offer essential financial services.

Gerhard van Deventer, senior fintech analyst at the South African Reserve Bank, spoke about the importance of regulation in the blockchain industry to protect consumers from fraud and other risks. He explained that regulators need to strike a balance when dealing with emerging technologies, as intervening too early or too late may be perceived negatively.

Robert Brine, director of cyber and intelligence solutions at Southern Mastercard, highlighted the challenge of ensuring customer safety while providing the same convenience as traditional finance.

This, as Seamus Rocca, CEO of Xapo Private Bank, argued for digital disruption in the African banking sector, stating that offshore banking that incorporates the crypto world is becoming increasingly popular. Banks like Xapo and secure wallet services like Cobo are in high demand to secure digital assets.

New solutions built by the blockchain industry are calling for policy makers to clear the way for further innovation, as the speed of technology innovation is outpacing regulation across the globe. Experts agreed that the blockchain industry has the potential to revolutionise the African economy and provide an alternative way for people to access financial services without intermediaries or high fees.

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