Chainalysis report: Africa's crypto market has grown by more than 1,200% since 2020

Digital analytics firm Chainalysis reported that Africa’s cryptocurrency market has grown significantly since last year, and that the region’s share of overall retail transaction volume is higher than the global average.

In a report published on Tuesday, Chainalysis said that between July 2020 and June 2021, the value of the African crypto market increased by more than 1,200%, with Kenya, South Africa, Nigeria and Tanzania seeing high rates of cryptocurrency adoption. The popularity of P2P platforms could be one of the drivers of wider adoption of cryptocurrencies in the region, given that some countries have restricted or banned residents from sending money to exchanges through local banks, the firm added.

According to Chainalysis, between July 2020 and June 2021, the entire African continent received $105.6 billion worth of cryptocurrencies. However, Africa accounts for a larger share of the market's total transaction volume made up of "retail-scale transfers" than any other region in the world - around 7%, compared to the global average of 5.5%. Additionally, P2P platforms — including Paxful and LocalBitcoins — accounted for 1.2 percent of all cryptocurrency transactions in Africa.

Artur Schaback, co-founder and chief operating officer of Paxful, said: "In many of these frontier markets, people cannot send funds from bank accounts to centralized exchanges, so they rely on P2P. Crypto products are becoming more and more user-friendly, so they can Get more people into the crypto economy and help them see cryptocurrency transactions faster, cheaper and more convenient."

Other drivers of cryptocurrency adoption in the region could include remittances, which could serve as a means of bypassing government restrictions on how much money people can send abroad. Many users in Africa may also use cryptocurrencies as a faster and cheaper way to pay for international business transactions and to hold their savings against any possible fluctuations in the value of fiat currencies.

Nigeria is planning to pilot its central bank digital currency eNaira starting October 1. South Africa is also involved in a joint initiative with Australia, Singapore and Malaysia to launch a fiat-pegged digital currency, but has yet to announce a possible start date for CBDC trials.

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