Aidi — Navigating Crypto & Fintech Regulation in Africa: A Practical Guide for Founders

If you’re building a fintech or crypto product for Africa, you already know one truth: your eyes will see more that your mouth can tell😂. Fintech and crypto sectors are among the most exciting in the world. Narrowing it down to Africa, it gets even more interesting, with over 60% of the population still unbanked or underbanked, and digital payments growing faster than ever; the opportunity in this space is massive for founders… but so are the regulatory problems.

Regulation in this sector is filled with many uncertainties. A regulation that was free can become strict within a year or even less, compliance requirements can change as well, policymakers can just wake up one day and depending on whatever mood they are in, change already existing rules or regulations. This means founders in this sector are constantly walking on a tightrope between innovation and regulation. 

You can’t build sustainably if you don’t understand the regulations guiding your sector, and our focus in this article will be on the current regulatory landscape across key African markets and practical, founder-friendly steps to stay compliant while building.

A little insight into current crypto and fintech regulations across some African countries today

Nigeria: Nigeria is considered one of the top three countries globally in terms of crypto adoption. Nigeria has tightened oversight for crypto and fintech and recent policy moves require crypto exchanges and certain virtual-asset activities to be regulated by the Securities and Exchange Commission (SEC) or other designated bodies. The Central Bank (CBN) also continues to issue guidance for cross-border payment systems and foreign-exchange liberalisation (e.g., PAPSS guidance and IMTO approvals). Nigeria is also standardising AML/automated AML expectations. If you operate in Nigeria, expect licensing, strict KYC/AML, and documentation requirements. 

South Africa: South Africa has one of the most developed regulatory regimes in Africa. The Financial Sector Conduct Authority (FSCA) treats crypto assets as financial products in many cases, requiring licensing and supervision for crypto businesses. Financial Intelligence Centre (FIC) directives (e.g., Travel Rule) are being enforced, meaning crypto-asset service providers must pass identity data along with transfers. The FSCA and related bodies are active and if you operate in South Africa, expect ongoing licensing and AML requirements.

Kenya & East Africa: Kenya has shifted from guidance to legislation, meaning that drafted policies and bills now move through the system to regulate virtual-asset service providers (VASPs) and taxation of digital assets. This policy was informed by the need to safeguard Kenya’s financial sector from potential risks of VAs and VASPs, while providing an enabling environment for the innovation to benefit the citizens of Kenya. The parliament and regulators have also been actively engaging on frameworks for licensing and supervision. The regional trend in East Africa is toward clearer, technology-friendly rules.

Regional developments: Pan-African initiatives like PAPSS (Pan-African Payment and Settlement System) and regional AML/financial integrity efforts are pushing toward interoperable payments and clearer cross-border rules. Regulators and multilateral institutions are investing in infrastructure (e.g., data centres) to support fintech, blockchain and AI, which affects where you can host data and how to comply with residency rules.

Practical Steps to Staying Compliant While Building

Incorporate where it matters: If you’re building in multiple countries, the best way to stay compliant is to register properly or partner with a licensed company in that country. Many startups begin by partnering with existing financial institutions or payment providers who already have the necessary licenses. This allows you to test your product and gain traction while working within the law. At the same time, have proper documentation: terms of service, privacy policy, data protection protocols, etc, to build credibility with investors, regulators, and customers.

Know what you’re building and decide your regulatory model early: Before you even talk to a lawyer or apply for a license, define what you’re building. Are you a payment processor? A savings platform? A crypto exchange? A lending service? Your business model determines which regulator you’ll deal with. For instance:

• In Nigeria, the Central Bank of Nigeria (CBN) oversees payments and lending, while the SEC handles investment-related products.
• In Kenya, the Capital Markets Authority (CMA) regulates digital assets and crowdfunding platforms.
• In South Africa, the Financial Sector Conduct Authority (FSCA) is in charge of crypto assets.

Once you’re clear on what category you fall into, you can structure your operations accordingly, saving yourself a lot of future headaches.

Implement robust KYC and AML controls: In fintech and crypto, compliance is your reputation. Every country now requires startups that deal with money to have Know Your Customer (KYC) and Anti-Money Laundering (AML) processes in place. This means verifying your users’ identities, flagging suspicious activity, and protecting against fraud. Build KYC flows (ID capture, verification, risk scoring), ongoing transaction monitoring, and SAR/STR processes. Consider automated AML vendors and start with conservative thresholds. Also prepare for “Travel Rule” requirements (pass along transaction originator/beneficiary info). Thankfully, there are tools built specifically for African startups like Smile Identity, YouVerify, and VerifyMe that automate this process and make it less painful.

Take Data Privacy Seriously: With so many fintechs handling sensitive financial data, data protection laws are tightening across the continent. Nigeria has the NDPR (Nigeria Data Protection Regulation), Kenya has its Data Protection Act, and South Africa enforces the POPIA Act. These laws require startups to store and process user data responsibly, and in some cases, locally. If you use foreign servers, ensure you have legal clearance for cross-border data transfers. If a country requires local hosting for payment or identity data, meet that requirement early. Partner with reputable local data-centre operators when needed.

Engage Regulators, Don’t Avoid Them: This one is very important. Most founders wait until they’re in trouble before they reach out to regulators. Don’t make that mistake. Instead, engage them early. Many African regulators run fintech sandboxes or engagement programs. Apply for sandbox programs where available; for example, the CBN’s Regulatory Sandbox in Nigeria or Kenya’s CMA Fintech Sandbox. These programs allow startups to test innovative products in a controlled environment before full licensing. Also, attend industry events, join associations like FintechNGR or AFIN, and build relationships with key players. When regulators know your name and understand your business model, they’re far more likely to work with you, not against you.

At the end of the day, it’s simple, regulators are not out to stop innovation; they just want to ensure it’s done responsibly, and in a space where everything is built on trust, it's best to be responsible and adhere to the regulations binding what you’re building wherever you are. Treat regulation as part of your product-market fit and design your product to be compliant from day one.