According to Cointelegraph, stablecoin transactions now make up nearly half of the total transaction volume in Sub-Saharan Africa, driven largely by currency devaluation. Chainalysis' latest report, published on October 2, reveals that stablecoins account for approximately 43% of the region’s total transaction volume.
Eric Jardine, Cybercrimes Research Lead at Chainalysis, explained the correlation between currency devaluation and stablecoin adoption. He noted that the key to understanding this relationship is recognizing that deteriorating purchasing power in local fiat currencies leads to increased adoption of USD stablecoins. Jardine added that stablecoin use could grow rapidly even outside of these circumstances.
The report also highlighted Nigeria's significant role in the global crypto market. Between July 2023 and June 2024, Nigeria received around $59 billion in crypto transaction volume. Notably, about 85% of the value of transfers in Nigeria are under $1 million, indicating a prevalence of smaller retail and professional-sized transactions. Nigeria also ranked highest in total stablecoins received, a trend influenced by the significant devaluation of the Naira.
Chris Maurice, co-founder and CEO of African crypto exchange Yellow Card, pointed out that the depreciation of the Naira has led to a rise in stablecoin inflows for transactions under $1 million, especially during periods of significant currency devaluation. A similar trend is observed in Ethiopia, which ranks 26th in crypto adoption. Ethiopia has seen a 180% year-over-year growth in retail-sized stablecoin transfers, with the Ethiopian birr losing 30% of its value in July after the government eased currency restrictions to secure IMF support.
Maurice emphasized that stablecoins act as a proxy for the dollar, making them indispensable for companies involved in international trade. Rob Downes of financial services firm Absa Group noted that institutional clients in South Africa find stablecoins to be a “game changer” for managing liquidity and reducing exposure to currency volatility. In recent months, stablecoins have surpassed Bitcoin as the most popular cryptocurrency received in South Africa.
Chainalysis concluded that Africa’s real-world crypto use cases offer valuable lessons for the global market and suggested that the continent is well-positioned to emerge as a global crypto leader.
Catherine