Nothing

2024

Coin

<div class="" data-block="true" data-editor="8u1a0" data-offset-key="dcpa9-0-0"> 
 <div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="dcpa9-0-0"> 
  <p><span style="font-weight: 400;">Stablecoins have rapidly become a fundamental part of Africa’s cryptocurrency landscape, accounting for 43% of the region’s total transaction volume, according to a </span><a href="https://www.chainalysis.com/blog/subsaharan-africa-crypto-adoption-2024/"><span style="font-weight: 400;"><span style="color: #0000ff;">report by Chainalysis</span></span></a><span style="font-weight: 400;">. Dollar-pegged Tether (USDT) and USD Coin (USDC) are the most popular on the continent, and they are increasingly used for value storage, remittances, and international trade by both individuals and businesses.&nbsp;</span></p> 
  <p><span style="font-weight: 400;">Below, we explore what is driving this increasing</span></p> 
  <h2 id="span-style-font-weight-400-fx-shortages-inflation-currency-devaluation-and-the-turn-to-stablecoins-span"><span style="font-weight: 400;">FX Shortages, Inflation, Currency Devaluation, and the Turn to Stablecoins</span></h2> 
  <p><span style="font-weight: 400;">A major driver of stablecoin adoption in Africa is the widespread shortage of foreign exchange (FX). Chris Maurice, CEO and Co-Founder of Yellow Card, </span><span style="color: #0000ff;"><a style="color: #0000ff;" href="https://www.chainalysis.com/blog/subsaharan-africa-crypto-adoption-2024/"><span style="font-weight: 400;">pointed out</span></a></span><span style="font-weight: 400;"> that nearly 70% of African nations face FX shortages which restricts access to U.S. dollars, the defunct, global currency. This has become a critical issue for businesses in these countries, forcing them to seek alternative solutions.</span></p> 
  <p><span style="font-weight: 400;">For example, in Nigeria, despite its oil wealth, years of economic mismanagement have led to a severe dollar shortage. Under the leadership of President Bola Tinubu, efforts to loosen foreign exchange restrictions in 2023 backfired, causing the naira to </span><a href="https://www.bloomberg.com/news/articles/2024-09-13/why-nigeria-s-naira-currency-ngn-usd-slumped-and-why-it-matters"><span style="font-weight: 400;"><span style="color: #0000ff;">plummet</span> </span></a><span style="font-weight: 400;">by 70% in 2024. Inflation </span><a href="https://www.stears.co/premium/article/may-2024-africa-macroeconomic-update/"><span style="font-weight: 400;"><span style="color: #0000ff;">skyrocketed</span> </span></a><span style="font-weight: 400;">to 33.2% in March 2024, creating a cost-of-living crisis that triggered widespread protests.</span></p>
 </div> 
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="5j1v0-0-0"> 
 <div data-offset-key="5j1v0-0-0"></div> 
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="6u03-0-0"> 
 <div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="6u03-0-0"> 
  <figure style="width: 100%" class="wp-caption aligncenter">
   <img loading="lazy" decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdnPNjpbU4LNhZBUHhcu4ZglpN890P9Rva0OneXnwowjil3uVuDRtrpM8mPsgwq0cAjJZUNR8X3Yx8A7iFoTS_q-FdoRLXD4Z9ue9qm3Dzh2fI3aMFcS6CDN85RqcEgAlqbGMQheNnsL7IQkuQx0qMZ-W4_?key=N-Qg5EFgeVBEoRBfO_WmJQ" alt="" width="568" height="359">
   <figcaption class="wp-caption-text">
    Nigeria’s June Inflation. Source: <a href="https://www.stears.co/premium/article/july-2024-macroeconomic-outlook/"><strong><span style="color: #0000ff;">Stears</span></strong></a>
   </figcaption>
  </figure> 
 </div> 
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="aqsm7-0-0"> 
 <div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="aqsm7-0-0">
  <span style="font-weight: 400;">&nbsp;The naira’s continuous depreciation, reaching over 1,650 naira to the dollar by October, pushed businesses and individuals to adopt stablecoins. Nigeria has since become Africa’s largest stablecoin market; over $21.8 billion in transactions has been </span><a href="https://www.chainalysis.com/blog/subsaharan-africa-crypto-adoption-2024/"><span style="font-weight: 400;"><span style="color: #0000ff;">recorded</span> </span></a><span style="font-weight: 400;">in 2024 alone.</span>
 </div> 
 <div data-offset-key="aqsm7-0-0"></div> 
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="fv2ag-0-0"> 
 <div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="fv2ag-0-0"> 
  <figure style="width: 100%" class="wp-caption aligncenter">
   <img loading="lazy" decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcmgWiC90MRtSt2YfWdfGCx2mNMFq4irVgFB5bcVfLsocwIFeGaLsMKmToUOEO_vaTalyWHSQveZe9I0-KyCKGf6F_RikNvUS7MT9UxOlGrv5ja2Dma2Z_8qrl6k4FzBlS_YQLOsnDSXxt-DfjvDSEMdsI?key=N-Qg5EFgeVBEoRBfO_WmJQ" alt="" width="686" height="408">
   <figcaption class="wp-caption-text">
    Total stablecoins received by country 2023 – 2024. Source: <a href="https://www.chainalysis.com/blog/subsaharan-africa-crypto-adoption-2024/"><strong><span style="color: #0000ff;">Chainalysis</span></strong></a>
   </figcaption>
  </figure> 
 </div> 
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="49rgb-0-0"> 
 <div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="49rgb-0-0">
  <span style="font-weight: 400;">A similar story unfolded in Zambia, where the kwacha </span><span style="color: #0000ff;"><a style="color: #0000ff;" href="https://finance.yahoo.com/news/zambias-kwacha-hits-record-low-115844552.html"><span style="font-weight: 400;">fell to an all-time</span></a></span><span style="font-weight: 400;"> low of 27.30 against the U.S. dollar in May 2024. The nation’s economy, already</span><span style="color: #0000ff;"><a style="color: #0000ff;" href="https://www.cnbcafrica.com/media/6352602672112/zambia-battles-currency-depreciation/"><span style="font-weight: 400;"> strained by a drought</span></a></span><span style="font-weight: 400;"> and its effects on agriculture and electricity, saw inflation rise for 15 consecutive months, peaking at 15.6% by September. With limited access to foreign currency, businesses turned to stablecoins for transactions, </span><a href="https://cointelegraph.com/news/currency-devaluation-drives-stablecoin-adoption-sub-saharan-africa'"><span style="font-weight: 400;"><span style="color: #0000ff;">leading</span> </span></a><span style="font-weight: 400;">to $2.2 billion in stablecoin transactions in 2024.</span>
 </div> 
 <div data-offset-key="49rgb-0-0"></div> 
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="enq1h-0-0"> 
 <div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="enq1h-0-0"> 
  <figure style="width: 100%" class="wp-caption aligncenter">
   <img loading="lazy" decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXf3gxGX4gokTihNv0ADfw-udaUpKyWLPR-w5b0BHz3cM0UId-YruaqEOuFC-KD69MgyVf_ngONTTuzhdQY_nl3kTWaz3ffeAg56nIy_dKcl2q1TVj4pxdtOmoponZbXjwxpl4WyzggJoCcKIwZkX7IXrgoc?key=N-Qg5EFgeVBEoRBfO_WmJQ" alt="" width="732" height="401">
   <figcaption class="wp-caption-text">
    Zambia’s Inflation Rate 2024. Source: <a href="https://tradingeconomics.com/zambia/inflation-cpi#:~:text=The%20annual%20inflation%20rate%20in%20Zambia%20quickened%20for%20the%2014th,%25%20from%2017.4%25%20in%20July"><strong><span style="color: #0000ff;">Trading Economics</span></strong></a>
   </figcaption>
  </figure> 
 </div> 
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="4td59-0-0"> 
 <div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="4td59-0-0"> 
  <p><span style="font-weight: 400;">In Ethiopia, the government </span><a href="https://www.bbc.com/news/articles/cxr2k24z29xo"><span style="font-weight: 400;"><span style="color: #0000ff;">floated</span> </span></a><span style="font-weight: 400;">the birr in July 2024, causing a sharp 30% devaluation against the U.S. dollar. While this move aimed to attract foreign investment and secure loans from the International Monetary Fund (IMF), it also increased stablecoin adoption as businesses sought to hedge against currency volatility. Stablecoin transactions in Ethiopia </span><a href="https://cointelegraph.com/news/currency-devaluation-drives-stablecoin-adoption-sub-saharan-africa'"><span style="font-weight: 400;"><span style="color: #0000ff;">reached</span> </span></a><span style="font-weight: 400;">$2.0 billion in 2024, with dollar-pegged assets becoming essential tools for preserving financial stability.</span></p> 
  <p><span style="font-weight: 400;">Inflation has been another key factor driving the growth of stablecoins in Africa. In Ghana, the cedi </span><a href="https://www.gnbcc.net/News/Item/7807"><span style="font-weight: 400;"><span style="color: #0000ff;">depreciated</span> </span></a><span style="font-weight: 400;">by nearly 20% between March and July 2024, exacerbating the country’s inflation crisis. Annual consumer inflation </span><span style="color: #0000ff;"><a style="color: #0000ff;" href="https://tradingeconomics.com/ghana/inflation-cpi#:~:text=Up%20to%2021.5%25-,Ghana%27s%20annual%20consumer%20inflation%20climbed%20to%2021.5%25%20in%20September%202024,to%2020.9%25%20from%2021.5%25."><span style="font-weight: 400;">reached</span></a></span><span style="font-weight: 400;"> 21.5% in September 2024, reversing months of declining rates. Faced with rising food prices and a weakening currency, many Ghanaians turned to stablecoins; the country </span><a href="https://cointelegraph.com/news/currency-devaluation-drives-stablecoin-adoption-sub-saharan-africa'"><span style="font-weight: 400;"><span style="color: #0000ff;">recorderd</span> </span></a><span style="font-weight: 400;">over $3.9 billion in transactions.</span></p>
 </div> 
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="9rh9d-0-0"> 
 <div data-offset-key="9rh9d-0-0"></div> 
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="8nmuq-0-0"> 
 <div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="8nmuq-0-0"> 
  <figure style="width: 100%" class="wp-caption aligncenter">
   <img loading="lazy" decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd75hpPoYHG3jt9ICZZh28T6HCvJKJcYnLBWa8w5J8ypIPXnAGAM7_SoeMUofyaA8d14QbW6CXabbchkK2HvM7AOqDeOWPfob9bhct9tNbz7rZAP2uVb2sy-_TVIhjroE8Emh2tC_9nFT6_rldVeoaNW3wU?key=N-Qg5EFgeVBEoRBfO_WmJQ" alt="" width="720" height="394">
   <figcaption class="wp-caption-text">
    Ghana’s Inflation Rate 2024. Source: <a href="https://tradingeconomics.com/ghana/inflation-cpi#:~:text=Up%20to%2021.5%25-,Ghana%27s%20annual%20consumer%20inflation%20climbed%20to%2021.5%25%20in%20September%202024,to%2020.9%25%20from%2021.5%25"><strong><span style="color: #0000ff;">Trading Economics</span></strong></a>
   </figcaption>
  </figure> 
 </div> 
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="5aai8-0-0"> 
 <div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="5aai8-0-0"> 
  <p><span style="font-weight: 400;">Kenya has also experienced significant currency devaluation, with the</span><span style="color: #0000ff;"><a style="color: #0000ff;" href="https://eastleighvoice.co.ke/business/55700/weak-shilling-takes-a-hit-on-kenyas-gdp-growth-in-q1"><span style="font-weight: 400;"> shilling losing ground against major currencies</span></a></span><span style="font-weight: 400;"> like the U.S. dollar, euro, and pound sterling. Although inflation </span><a href="https://www.stears.co/article/macro-data-bulletin-kenyas-inflation-rate-slows-to-432-in-july-2024/"><span style="font-weight: 400;"><span style="color: #0000ff;">eased</span> </span></a><span style="font-weight: 400;">to 4.32% by mid-2024, concerns about a potential default on the country’s eurobond debt continued to weigh on the shilling. This economic instability fueled the adoption of stablecoins, with Kenya </span><a href="https://cointelegraph.com/news/currency-devaluation-drives-stablecoin-adoption-sub-saharan-africa'"><span style="font-weight: 400;"><span style="color: #0000ff;">reporting</span> </span></a><span style="font-weight: 400;">$3.3 billion in transactions in 2024 as businesses and individuals sought alternatives to preserve their wealth.</span></p> 
  <p><span style="font-weight: 400;">On the other hand, South Africa’s rand has been </span><span style="color: #0000ff;"><a style="color: #0000ff;" href="https://tradingeconomics.com/south-africa/inflation-cpi"><span style="font-weight: 400;">relatively stable</span></a></span><span style="font-weight: 400;"> compared to other African currencies in 2024. Despite facing pressure from a strong U.S. dollar, the rand has </span><a href="https://www.stears.co/premium/article/may-2024-africa-macroeconomic-update/"><span style="font-weight: 400;"><span style="color: #0000ff;">benefitted</span> </span></a><span style="font-weight: 400;">from improved power supply and growing foreign exchange reserves. However, even in South Africa, stablecoins have gained traction, with $13.5 billion in transactions </span><a href="https://cointelegraph.com/news/currency-devaluation-drives-stablecoin-adoption-sub-saharan-africa'"><span style="font-weight: 400;"><span style="color: #0000ff;">recorded</span> </span></a><span style="font-weight: 400;">in 2024. This highlights how even relatively stable economies are turning to stablecoins for international transactions and as a hedge against future inflation risks.</span></p>
 </div> 
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="32avi-0-0"> 
 <div data-offset-key="32avi-0-0"></div> 
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="8vppl-0-0"> 
 <div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="8vppl-0-0"> 
  <figure style="width: 100%" class="wp-caption aligncenter">
   <img loading="lazy" decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeD3xw3abSCEONz1DYcYbgiNB0rf_wWOPiVzIUtuskQRov7vLkm3mQkkSP-6iqfvOpvq9PnwPX_tZqFKnZVCXVknx0WyqRrO0RSiqO5pAykY0npV-IKBCTfhWdupzYzndg0jTqehj60gfAev32a0X-XJkV-?key=N-Qg5EFgeVBEoRBfO_WmJQ" alt="" width="740" height="398">
   <figcaption class="wp-caption-text">
    South Africa’s Inflation Rate 2024. Source: <a href="https://tradingeconomics.com/south-africa/inflation-cpi"><strong><span style="color: #0000ff;">Trading Economics</span></strong></a>
   </figcaption>
  </figure> 
 </div> 
</div> 
<div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="a9alv-0-0"> 
 <h2 id="span-style-font-weight-400-the-future-of-stablecoins-in-africa-span"><span style="font-weight: 400;">The Future of Stablecoins in Africa</span></h2> 
 <p><span style="font-weight: 400;">The reliance on stablecoins in Africa will likely continue growing. With many African nations needing to convert currencies for international transactions, stablecoins offer a more efficient, faster, and cost-effective solution. Beyond that, they are bringing more people into the financial system. For the unbanked population, especially those using mobile phones for daily transactions, stablecoins provide a practical alternative to traditional banking. Given the widespread use of mobile payment platforms, stablecoins could become the preferred method for storing, transferring, and spending money across the continent.</span></p> 
 <p><span style="font-weight: 400;">However, there are challenges ahead. Governments on the continent have shown that they fear that stablecoins could facilitate capital flight, tax avoidance, and illicit activities. And they have responded in different ways. For example, Nigeria initially banned cryptocurrencies but later introduced regulations, including taxation guidelines, to control and benefit from their usage. Others, like Ghana<span style="color: #0000ff;">,</span></span><span style="color: #0000ff;"><a style="color: #0000ff;" href="https://www.bog.gov.gh/wp-content/uploads/2024/08/Draft-Guidelines-on-Digital-Assets.pdf"><span style="font-weight: 400;"> introduced comprehensive rules</span></a></span><span style="font-weight: 400;"> to</span><i><span style="font-weight: 400;"> “foster innovation while effectively managing risks associated with digital assets.”</span></i></p> 
 <p><span style="font-weight: 400;">These varied but reactive approaches mean stablecoin issuers must stay ahead of evolving regulations while maintaining robust financial reserves and governance standards. As governments and the industry adapt, the future of stablecoins in Africa will depend on striking the right balance between innovation and regulation.</span></p> 
 <p><b><i></i></b></p>
</div>  
<div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="a9alv-0-0">
 <b><i>Disclaimer: </i></b><i><span style="font-weight: 400;">This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence. </span></i>
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="7ru5m-0-0"> 
 <div data-offset-key="7ru5m-0-0"></div> 
 <div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="7ru5m-0-0">
  <span data-offset-key="7ru5m-0-0">If you would like to read more market analyses like this, visit </span><span class="sc-iqseJM ksHBpV" style="color: #0000ff;"><a style="color: #0000ff;">DeFi Planet</a></span><span data-offset-key="7ru5m-2-0"> and follow us on</span><span class="sc-iqseJM ksHBpV"><a><span data-offset-key="7ru5m-3-0"> <span style="color: #0000ff;">Twitter</span></span></a></span><span style="color: #0000ff;" data-offset-key="7ru5m-4-0">,</span><span class="sc-iqseJM ksHBpV"><a><span data-offset-key="7ru5m-5-0"> <span style="color: #0000ff;">LinkedIn</span></span></a></span><span style="color: #0000ff;" data-offset-key="7ru5m-6-0">,</span><span class="sc-iqseJM ksHBpV"><a><span data-offset-key="7ru5m-7-0"> <span style="color: #0000ff;">Facebook</span></span></a></span><span style="color: #0000ff;" data-offset-key="7ru5m-8-0">,</span><span class="sc-iqseJM ksHBpV"><a><span data-offset-key="7ru5m-9-0"> <span style="color: #0000ff;">Instagram</span></span></a></span><span data-offset-key="7ru5m-10-0"><span style="color: #0000ff;">,</span> and</span><span class="sc-iqseJM ksHBpV" style="color: #0000ff;"><a style="color: #0000ff;"> CoinMarketCap Community</a></span><span data-offset-key="7ru5m-12-0">.</span>
 </div> 
</div> 
<div class="" data-block="true" data-editor="8u1a0" data-offset-key="80rmg-0-0"> 
 <div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="80rmg-0-0">
  <span data-offset-key="80rmg-0-0">Take control of your crypto&nbsp; portfolio with MARKETS PRO, DeFi Planet’s suite of analytics tools.”</span>
 </div> 
</div> 
<p>The post <a href="https://defi-planet.com/2024/10/the-growing-role-of-stablecoins-in-africas-crypto-economy/">The Growing Role of Stablecoins in Africa’s Crypto Economy</a> appeared first on <a href="https://defi-planet.com">DeFi Planet</a>.</p>

The Growing Role of Stablecoins in Africa’s Crypto Economy

Table of Contents

DeFi Planet

Other articles published on Oct 23, 2024

Binance Will Remove ALGO/FDUSD, CHR/ETH, DGB/BTC, GMX/BTC Trading Pairs on October 25

Cardano Founder Insists ADA Will Surpass Bitcoin and Ethereum, But Experts Think This Altcoin Cou...

Elastos Launches BPoS NFTs for Bitcoin-Secured ELA Staking, Expanding Incentives and Rewards for ...

Metal Pay Integrates with FedNow, Enhancing Real-Time Financial Transactions

Ripple Co-Founder Chris Larsen Donates $1 Million in XRP to Kamala Harris' Presidential Campaign

Massive 7,000% Surge Predicted for XRP Killer by December Following $100K Investment from XRP Whale

Join our free newsletter for daily crypto updates!