Stablecoins Near 50% of Sub-Saharan Africa Transactions
03 Oct, 2024 ● أخبار العملات
Stablecoin transactions now represent almost half of the overall transaction volume in Sub-Saharan Africa, primarily driven by currency devaluation.
According to Chainalysis' latest report on the African cryptocurrency market, stablecoins make up around 43% of the region's total transaction volume.
“We have repeatedly noted an association between currency devaluation and stablecoin adoption,” said Eric Jardine, Cybercrimes Research Lead at Chainalysis in an interview with Cointelegraph.
He further explained that understanding this link “is the direction of the causal arrow, which points from deteriorating purchasing power in local fiat terms to USD stablecoin adoption,” adding:
“What this means is that it is reasonable to assume that stablecoin adoption will grow rapidly whenever local currencies lose their value, but that stablecoin use can also grow fast outside of these circumstances.”
The report also highlighted that Nigeria continues to be a leading global force in crypto adoption.
Between July 2023 and June 2024, Nigeria received around $59 billion in crypto transaction volume.
The findings also showed that nearly 85% of the transaction values in Nigeria are under $1 million, emphasizing the prevalence of smaller retail and professional-sized transfers.
Nigeria ranked as the top country in terms of stablecoins received, with the Naira experiencing significant devaluation.
“The banks don’t have dollars, the government doesn’t have dollars, and even if they did, they wouldn’t give them to you,” said Chris Maurice, co-founder and CEO of the African crypto exchange Yellow Card.
“As the naira depreciates, we can see a rise in stablecoin inflows for transactions under $1 million, with more pronounced activity during periods of significant currency devaluation,” Chainalysis confirmed.
Ethiopia is also experiencing a similar trend, ranking 26th in crypto adoption, according to Chainalysis.
Ethiopia's market for retail-sized stablecoin transfers is currently the fastest-growing in Africa, with 180% growth year-over-year.
In July, the Ethiopian birr (ETB) dropped 30% in value after the government relaxed currency controls in an effort to obtain support from the International Monetary Fund (IMF).
Maurice noted that stablecoins act as a stand-in for the dollar: “If you can get into USDT or USDC, you can easily swap that into hard dollars elsewhere,” making stablecoins essential for businesses engaged in international trade.
Rob Downes from financial services firm Absa Group observed a similar shift among institutional clients in South Africa, describing stablecoins as a “game changer.”
“Our institutional clients are particularly interested in using stablecoins as a tool for managing liquidity and reducing exposure to currency volatility,” he commented.
Additionally, stablecoins have overtaken Bitcoin as the most widely received cryptocurrency in South Africa in recent months, according to Chainalysis.
Chainalysis concluded that Africa’s practical applications of crypto “carry valuable lessons for the global market,” adding that the continent is “well-positioned to emerge as a global crypto leader.”
Sources:
https://cointelegraph.com/news/currency-devaluation-drives-stablecoin-adoption-sub-saharan-africa
https://www.chainalysis.com/blog/subsaharan-africa-crypto-adoption-2024
