Fintech innovators welcome precautionary regulations

 

Fintech firms and blockchain innovators are increasingly supporting, rather than opposing, clear regulation to drive trust, viewing tailored rules as essential for driving institutional trust, enabling mainstream adoption, and providing a stable framework for scaling operations.

Rather than viewing regulation as a barrier, several fintech innovators and companies are now embracing it to foster security, compliance, and long-term growth, particularly in regions establishing new digital asset laws.

This was the rallying call last Friday at the Nairobi Stablecoin Conference, held amid Kenya’s enactment of Africa’s first standalone law governing virtual assets, with many speakers admitting that clear legislation positions the country as a potential regional hub, but stressed that adoption will ultimately depend on how forthcoming subsidiary regulations are implemented.

Indeed, investment in Africa’s blockchain ecosystem has been rising exponentially, according to the CV VC 2024 African Blockchain Report, with many projects now focusing on practical applications—identity verification, land registries, and financial inclusion—rather than speculative crypto plays.

According to Moses Kimathi, a Nairobi-based digital-finance researcher, this broader adoption underscores why youth-focused financial tools are critical.

“Over the past three years, we’ve seen a decisive shift from one-off financial-literacy campaigns toward structured, long-term tools designed specifically for minors,” says Kimathi.

Wale Osidiende, Chief Operating Officer at Bitnob, said regulation is no longer a threat to innovation but a necessary foundation for scale.

“Regulations are coming, and that makes us relax, knowing that there are proper guidelines guiding how things are done. Stablecoins enable instant, low-cost cross-border settlements compared to traditional correspondent banking systems,” Osidiende said.

Edward Ndichu of WapiPay said regulation is central to building confidence in stablecoins, particularly among businesses and everyday users, noting that adoption is already significant, with estimates showing that Kenyans transact about $500 million in stablecoins every month, involving millions of users.

However, industry leaders cautioned against heavy-handed rules. Tony Olendo, Chairman of the Virtual Asset Chamber, said passing the law was only the first step and urged regulators to ensure subsidiary regulations clearly define licensing, oversight, and institutional responsibilities.

“If you tax the industry too early, you will hamper growth. We are calling for simple, practical rules that allow the ecosystem time to mature,” Olendo said.

Moyo Sodipo, co-founder of Busha, said regulation is critical for African fintechs to compete globally as financial systems increasingly shift towards blockchain-based rails. He said clear rules reduce uncertainty and encourage responsible innovation.

The push reflects soaring demand for faster, cheaper, and more inclusive financial services in Africa, where Mastercard’s report anticipates digital transactions to reach $1.5 trillion by 2030.

According to PwC’s Global M&A Trends 2023, Africa’s tech and fintech sectors saw a 22% year-on-year increase in deal volume in 2023, driven by cross-border payment inefficiencies and investor appetite for scalable solutions.

McKinsey analysis further suggests that, with these tailwinds, fintech revenues could reach up to $47 billion by 2028, representing about a five-fold increase from its value of $10 billion in 2023.

Africa’s digital payments sector has long been a battleground between mobile money operators like M-PESA, agile fintech startups, and traditional banks.

Landmark deals like WorldRemit’s $500 million acquisition of Sendwave in 2020 have also paved the way, streamlining remittances between Africa and the diaspora.

Africa’s remittance flows hit $100 billion in 2024, while intra-African trade remains hamstrung by costly and inefficient payment systems.

Fintechs like Flutterwave, Chipper Cash, and Wave have capitalised on this gap, but mounting competition is forcing even market leaders to consolidate.

As cross-border trade and remittances surge, companies are turning to M&A to rapidly scale infrastructure, acquire technical expertise, and secure regulatory approvals across markets.

“The future of African fintech hinges on interoperability and ecosystem partnerships,” notes a 2024 McKinsey report, Redefining Success: A New Playbook for African Fintech Leaders.

The Africa Continental Free Trade Area (AfCFTA) has further galvanised efforts, with the Pan-African Payment and Settlement System (PAPSS) aiming to cut transaction costs by $5 billion annually.

Still, momentum is building. With AfCFTA promising a US$3.5 trillion continental market, the rush to merge, acquire, and ally shows no sign of slowing.