In a recent op-ed published by Fortune, Binance CEO Richard Teng emphasized the transformative potential of cryptocurrency, noting: “Cryptocurrency often dominates headlines for its market milestones and for powering new trends on the intersection of finance and the internet culture, but its biggest promise lies in breaking down barriers. Digital assets, conceived as tools to democratize financial access, offer a lifeline for the 1.4 billion unbanked and billions more around the globe underserved by the incumbent systems. In a world where basic financial services are still a privilege, crypto offers a practical alternative to systemic exclusion.”

Traditional banking’s efforts to increase access and inclusion to basic financial services have failed to address this issue, but the cryptocurrency ecosystem, an alternative to the traditional system, could solve it. Crypto has already started to do so.

There are many such examples of crypto helping to increase financial inclusion around the world, but one region in particular that has been benefiting from this trend is Africa. With an existing digital finance foundation, via Africa’s widespread adoption of mobile platforms during the pre-crypto era, the continent is well-positioned to embrace the crypto revolution.

As such, scores of crypto startups have opened up shop in Africa. Their efforts to capitalize on high-demand for accessible and stable financial products could in turn lead to greater financial inclusion.

Why Africa is Embracing Crypto So Strongly

When you think “fintech,” startups located in developed economies may be what first comes to mind. Yet despite preconceived notions, one can argue that Africa was an early adopter of fintech well before other regions of the world.

That is, back in the 2000s, telecom companies Safaricom and Vodafone first launched the M-Pesa mobile money service in Kenya. This platform helped to bring millions of unbanked or underbanked individuals into the financial system.

In the years that followed, M-Pesa expanded into other African countries. In addition, other financial institutions across Africa launched their own mobile money services as well. Yet while this technological innovation helped to bring the unbanked and underbanked into the mainstream financial fold, there are some downsides with these products.

Namely, high remittance and transaction fees. These types of accounts, denominated in local currency, provide little opportunity for users to hedge against inflation and economic instability. Fortunately, crypto-based financial technology products offer a solution to both these issues. With users able to convert local currency into less volatile stablecoins, then transfer them, whether within country or overseas, at a lower transaction cost than traditional platforms, it’s easy to see why Africans are embracing cryptocurrency so strongly.

What’s Needed to Further Grow Africa’s Crypto Ecosystem

Although crypto startups are benefiting from steadily-increasing demand for their services, market penetration remains low. According to Statista, crypto market penetration stands at only 4.05%. Yet while crypto platforms have a long way to go before coming close to supplanting the traditional finance services space, a possible catalyst to accelerate user adoption may be just around the corner.

That would be the further establishment and maturity of regulatory frameworks across the nations of Africa. This is already taking shape not just in mature African economies, like South Africa, but even in frontier markets, like Ghana, as well. With established and clear regulations, crypto startups will be even better-positioned to launch and scale their businesses.

As Africa’s crypto ecosystem expands, unbanked and underbanked communities will have even greater access to basic financial services. In turn, increased access to basic financial services could also increase access to the global economy, further opening up economic opportunity.

The End Result: Crypto Could Defeat Extreme Poverty on its Last Frontier

As Teng also noted in his op-ed, the future of finance should be one where everyone has a seat at the table. Crypto stands to fulfill this future, but for it to happen, Teng argues, local policymakers must establish regulatory frameworks that both protect consumers, while at the same time avoid stifling growth.

Based on the regulatory frameworks established by African nations such as South Africa and Ghana, this appears achievable. That’s a promising sign, in terms of further proliferation of crypto startups across the continent.

Again, crypto-based platforms offer many advantages to traditional financial systems. These include accessibility advantages, security advantages, as well as transaction speed/ease advances.

All of these make crypto a fantastic vehicle to increase access to financial services. In turn, this could make a major difference, in defeating extreme poverty across the African continent, regarded as its last frontier.