Crypto is assisting fast-growing economies in establishing financial infrastructure
With the help of cryptocurrencies, developing economies are once again leapfrogging previous waves of technical advancement.
Institutions in Africa are embracing crypto advances over options supplied by the old plumbing of the global financial system, much like consumers in India and Indonesia did a decade ago when they ditched landlines for cellphones.
As Elizabeth Rossiello, founder of the Africa-focused fintech platform AZA Finance, explained at Yahoo Finance’s All Markets Summit Plus conference, crypto is helping to solve problems ranging from cross-border payments in Africa to operating during bank holidays in a dollar-dominated economy.
“Why should we use dollar legacy infrastructure when we’re trading between continents that don’t include the dollar? That may sound extreme, but trading from West Africa to the United States and then back to South Africa in virtually a triangle makes little sense “she stated
Instead, institutions in her company’s more than 100 nations have increasingly turned to crypto trading to improve their efficiency. Some financial organizations, as Rossiello explained, have begun to use stablecoins, or cryptocurrencies that are designed to remain tethered to the dollar, rather than having to transact in dollars tied to the traditional banking system. It’s not universal across the board, and in its current breadth, it’s more of a compliment than a replacement, but it’s another tool in her portfolio that has been used by some institutions working with her organization since it opened the first crypto exchange in Africa.
“In our basket of over 100 currency pairs that we trade, digital currency pairs are right alongside it,” she said. “And so when there’s a U.S. dollar holiday, for example, in North America, we don’t need trading to stop in West Africa or South Africa or trade between Africa and China. So digital currencies really provide a necessary solution, not just for investing in a future asset class, but also in infrastructure for settlement of foreign exchange and frontier markets.”
It’s fascinating to observe how crypto is being used around the world, especially since El Salvador approved bitcoin as legal cash, at a time when U.S.-based crypto media is so focused on speculation and price appreciation. It’s even more reason, according to Rossiello, who is also co-chair of the World Economic Forum’s Council on Blockchain, for authorities to embrace what crypto can open at a faster pace.
“I believe the regulatory map will begin to become much more green, even though we’ve been in this process for eight years or more,” she said. “I don’t want to say it’s too large to fail, but we’ve reached a point where we can’t stop moving forward.”
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