- The FTX collapse has brought in significant questions as to the conduct of cryptocurrency, and many crypto traders are pondering over their next step
- Even during the upcoming crypto winter announcement, the crypto adoption rate in Africa appeared unaffected. Unfortunately, the FTX collapse has done significant damage
- Senator Ihenyen believes the global crypto industry will undergo a rough period of regulations. Additional restrictions and monitoring will occur to prevent a crisis such as the FTX collapse
Africa’s crypto ecosystem has had a fantastic year. The world recognized the efforts of every crypto trader residing within the lands. Blockchain technology companies and enterprises began to support this hidden potential, thus developing various projects as a by-product.
Different African countries have taken the liberty of going as far as recognizing crypto as a financial asset( South Africa). However, as the year progressed, things took a drastic turn. The long-predicted crypto winter dawned on each crypto trader as prices plummeted. To further escalate the dilemma, FTX recently collapsed, creating a vacuum within Africa’s crypto ecosystems. Will Africa’s crypto ecosystem survive this ordeal?
Effects of FTX collapse in Africa
According to Africa’s blockchain revolution and CEO of Lagos tech firm SaBi Group, Lucky Uwakwe stated that the damages caused by FTX on the global crypto ecosystem are worse than most think. Its various investors and partners each form a chain-like connection to blockchain technology startups and organizations. Once they are unable to access their funds, all hell breaks loose.
To make matters worse, even before the FTX collapse, several crypto traders and organizations began preparations for an upcoming crypto winter. Its effects were already in progress as significant cryptocurrencies such as Bitcoin and Ethereum slowly began to decline. The results were still manageable, but FTX acted as a catalyst. Hence, most crypto coins have dropped significantly, except a few, such as Bitcoin and Shiba Inu.
Also, Read Nestcoin suffers from FTX collapse.
Binance did try to play hero and save its rival company. Unfortunately, after further investigation of the situation, it could not take the risk of regulatory scrutiny that hovered above FTX. The crypto winter was terrible enough; additional regulations were something other than what Zhao, CEO of BInance, was willing to accommodate.The FTX collapse has brought in significant questions as to the conduct of cryptocurrency, and many crypto traders are pondering what is next. Crypto volatility is a risk every trader signs up for. The inconsistent value rise and fall is always a manageable risk for them. However, the instant loss of capital and savings is another story together. The effects were so severe Africa’s crypto ecosystem was also affected to some degree.
Africa’s crypto ecosystem may require help
Throughout the year, various African countries have made it to the front page of crypto news. The efforts of dedicated crypto traders and Blockchain startups directly represent Africa’s zeal to conquer the crypto space. Even during the upcoming crypto winter announcement, the crypto adoption rate in Africa appeared unaffected.
Unfortunately, the FTX collapse has done significant damage. Moreso since there are still various questions regarding the discriminatory treatment of crypto traders. Several users in the Bahamas and US could access and withdraw their funds right before the FTX finally hit rock bottom.
Unfortunately, that was not the case for African crypto trades. Most African FTX users used the platform to store their hard-earned capital in US dollars less volatile than several fiat currencies in African countries.
Although FTX did not focus mainly on Africa, several enthusiastic traders reached out t the platform mainly due to its various functionalities and benefits. As such, the FTX collapse has affected over 24 venues across Africa, most residing in Nigeria and Kenya. At the same time, the rest comprise South Africa, Egypt, Uganda, Tanzania and Senegal.
In an interview, Senator Ihenyen, the president of the Nigerian lobby group Stakeholders in Blockchain Technology Association of Nigeria(SIBAN), stated that there would be consequences for this sudden drop. He believes the global crypto industry will undergo a rough period of regulations. Additional restrictions and monitoring will occur to prevent a crisis such as the FTX collapse.
With the damages done, various African governments who already had issues with crypto have now renewed their resolve to reject cryptocurrency. Blockchain startups dealing with crypto have slowed their progress as Africa’s crypto ecosystem tries to recover.
What next for Africa’s crypto ecosystem
According to Benjamin Arunda, a member of the Blockchain Association of Kenya, while the FTX collapse has affected various centralized exchanges and the overall crypto winter, African crypto traders are more challenging than they seem. He estimated that the crypto enthusiasm might be slightly affected for a time but will regain its momentum quickly.
The crypto industry offers multiple opportunities, not just crypto coins. NFT Africa and the African Metaverse are still upcoming projects within the continent.
He adds that for crypto exchange platforms to regain and rebuild the lost trust, they must incorporate a Proof of Reserves reassuring crypto traders that will accommodate any unforeseen hindrances.
Unfortunately, the fact is that the crypto adoption rate will reduce for some time. The FTX collapse has proven the simple facts that multiple African governments are addressing; that cryptocurrency is a gamble. The ban on various countries will remain, and central banks may revise crypto regulations soon.
Different individual crypto traders have expressed their disappointments in FTX, as the collapse robs many Africans of their hard-earned money and is now gone. Blockchain startups might not be affected as much, but the pace of production and consumption has been affected.
Without a doubt, Africa’s crypto ecosystem will bounce back but will the amount of enthusiasm match pre-FTX collapse?