Source: Chainalysis; Translated by: Tao Zhu, Golden Finance
Sub-Saharan Africa accounts for the smallest share of the global cryptocurrency economy, accounting for 2.7% of global transaction volume between July 2023 and June 2024—reflecting the region’s smaller GDP relative to other regions. Despite this, Sub-Saharan Africa still achieved modest growth, with an estimated $125 billion in on-chain value during the period, an increase of $7.5 billion from last year.
Cryptocurrency is undoubtedly changing the financial landscape in the region, which is home to many countries that rank highly in our Global Adoption Index. Nigeria maintains its position as a top global player, ranking second globally, while Ethiopia (26), Kenya (28), and South Africa (30) also make the top 30.
The real-world use cases for cryptocurrencies in Africa are particularly compelling. Africans are using cryptocurrencies for business payments, as a hedge against inflation, and for more frequent, smaller (i.e. retail) transfers.
Notably, Sub-Saharan Africa leads the world in DeFi adoption, likely due in part to the region’s growing demand for accessible financial services, where only 49% of adults had a bank account as of 2021, according to the World Bank.
With its position as a leader in financial innovation and inclusion, Sub-Saharan Africa is becoming a global example of how cryptocurrency can drive real-world impact, particularly in regions underserved by traditional financial systems.
Stablecoins are driving economic resilience and global connectivity in Sub-Saharan Africa
Stablecoins have become a key element of the crypto economy in Sub-Saharan Africa. In countries where local currencies are highly volatile and the use of the U.S. dollar is limited, dollar-pegged stablecoins such as USDT and USDC have gained traction, providing businesses and individuals with a reliable way to store value, facilitate international payments, and support cross-border trade.
Stablecoins currently account for approximately 43% of the region’s total trading volume.
To further understand the growing prominence of stablecoins, we spoke to two key figures shaping the African cryptocurrency landscape: Rob Downes, Head of Digital Assets at ABSA Bank, CIB (a large African bank with operations in 12 African countries) and Chris Maurice, CEO and co-founder of Yellow Card (one of Africa’s leading crypto asset exchanges with operations in 20 countries on the continent).
The main driver for stablecoin adoption in Africa is the foreign exchange (FX) crisis facing many countries.
“Approximately 70% of African countries face foreign exchange shortages, and businesses are struggling to obtain the dollars they need to operate,” Maurice explained. “Stablecoins offer these businesses an opportunity to continue operating, grow, and strengthen local economies.” Small and medium-sized stablecoin inflows (the amounts we measure are less than $1 million) tend to align with naira depreciation, as shown below.
As the Naira depreciates, we can see an increase in stablecoin inflows for transactions below $1 million, with this activity being more pronounced during periods of significant currency depreciation.
Ethiopia, Africa’s second most populous country with a population of 123 million, is currently the fastest growing market for retail-scale stablecoin transfers in the country, with year-on-year growth of 180%.
The local Ethiopian currency, the birr (ETB), lost 30% of its value in July after the government eased currency restrictions in exchange for a $10.7 billion loan from the International Monetary Fund and the World Bank. Such a depreciation could further fuel demand for stablecoins.
For many African businesses, access to stablecoins through platforms like Yellow Card offers an alternative to traditional financial institutions (FIs) that are unable to meet their dollar needs. “Stablecoins are an alternative to the dollar,” Morris said. “If you can get USDT or USDC, you can easily exchange it for hard currency elsewhere.” This reality makes stablecoins indispensable for companies involved in international trade. From small-scale importers buying goods overseas to large multinationals importing raw materials from Europe — stablecoins are facilitating transactions that would otherwise be stalled by currency shortages.
Stablecoins are also revolutionizing cross-border payments across Africa. “People don’t care about cryptocurrencies,” said Morris, who stressed that the region’s focus is on real use cases for cryptocurrencies. He cited businesses served by Yellow Card, such as a large food producer that uses stablecoins to pay overseas suppliers. In addition, many African fintech companies rely on stablecoins to manage large amounts of local currencies, which are then converted into stablecoins to facilitate cross-border payments.
Rob Downes of Absa Group noted a similar trend among institutional clients in South Africa. “Our institutional clients are particularly interested in using stablecoins as a tool to manage liquidity and reduce exposure to currency volatility,” Downes told us. In countries where the value of the local currency fluctuates, stablecoins can be an attractive option for businesses looking to hedge currency risk.
Downes also pointed to the growing use of stablecoins for remittances and international payments. “We think stablecoins are going to be a game changer,” he said. For individuals sending money to family members overseas or paying for expenses, stablecoins offer a faster and more affordable alternative to traditional remittance services.
Starting at the end of 2023, stablecoins have continued to grow on local exchanges in South Africa - with a month-on-month increase of more than 50% in October 2023. Stablecoins have replaced Bitcoin as the most popular cryptocurrency in recent months.
While the use of stablecoins is rapidly expanding across Africa, the regulatory landscape is also gradually evolving. In South Africa, the Financial Sector Conduct Authority (FSCA) has provided regulatory clarity by classifying crypto assets as financial products, although there are no specific regulations for stablecoins. “We are working closely with regulators such as the [South African] Reserve Bank to ensure that we are prepared for any developments in stablecoin regulation, which we expect will soon become a major area of focus,” Downes added. Maurice noted that in many cases stablecoins exist in a “grey area” where they are neither explicitly regulated nor banned. He stressed the importance of working with regulators to ensure that stablecoin users remain compliant. “We do a lot of work with local regulators,” said Maurice. “We are working with central banks and financial authorities in 20 countries to help them understand how to use stablecoins safely and effectively.”
Looking ahead, both Downes and Maurice believe that stablecoins will continue to play a central role in the African economy. “I think stablecoins will become the main use case for cryptocurrencies in South Africa in the next three to five years,” Downes said.
Maurice agreed, adding that stablecoins are helping open African economies to global markets. “Stablecoins are actually developing a market for African currencies that have never had a presence internationally,” he said. By providing a way for businesses to transact in non-volatile currencies, stablecoins are increasing price transparency and encouraging foreign investment. “It’s creating a more open economy and actually encouraging investment,” Maurice added.
Nigeria is the epicenter of crypto activity in Sub-Saharan Africa
In recent years, Nigeria has emerged as a global leader in cryptocurrency adoption, thanks to innovative use cases that address economic challenges. The country ranks second overall in our Global Adoption Index, receiving approximately $59 billion worth of cryptocurrency between July 2023 and June 2024.
Crypto activity in Nigeria is primarily driven by small retail and professional-sized transactions, with approximately 85% of transfers valued at less than $1 million.
We spoke to Moyo Sodipo, COO and co-founder of Nigerian cryptocurrency exchange Busha, to find out what the realities of cryptocurrency adoption are like in the country. Sodipo said that everyday activities such as bill payments, mobile phone top-ups, and retail shopping are increasingly being driven by cryptocurrencies. “People are starting to see the real-world utility of cryptocurrencies, especially in everyday transactions, as opposed to the previous view of cryptocurrencies as a means to get rich quick,” he explained.
As in Ethiopia, Ghana, and South Africa, stablecoins are a big part of Nigeria’s crypto economy, accounting for about 40% of all stablecoin inflows in the region — the highest in Sub-Saharan Africa.
Many Nigerians rely on stablecoins to send money across borders, as traditional remittance channels are inefficient and costly. “Cross-border remittances are the main use of stablecoins in Nigeria. It’s faster and more affordable,” Sodipo noted.
As shown in the chart below, the average cost of sending $200 from Sub-Saharan Africa is approximately 60% lower using stablecoins compared to traditional remittance methods using fiat currencies.1
As in other African countries, the main drivers of stablecoin adoption in Nigeria are inflation and the depreciation of the naira, which hit an all-time low in February 2024. We can see the impact of this trend by looking at the size of transfers under $1 million. In the first quarter of 2024, stablecoins were worth nearly $3 billion, making stablecoins the largest segment of transactions under $1 million in Nigeria.
While Bitcoin and altcoins remain significant and represent billions of dollars in value, stablecoins are clearly becoming the medium of choice for small and medium-sized transactions, suggesting widespread adoption.
In addition to the growing prominence of stablecoins, DeFi is also experiencing a major moment in Nigeria, which echoes the broader trend of Sub-Saharan Africa as a global leader in DeFi adoption. Nigeria is at the forefront of this trend, with DeFi services valued at over $30 billion last year.
In addition to the traditional financial system, DeFi platforms offer Nigerians new opportunities to earn interest, take out loans, and participate in decentralized exchanges. “DeFi is a key growth area as users explore ways to maximize returns and access financial services that would otherwise be inaccessible,” said Sodipo.
The lifting of the ban on banks servicing cryptocurrency companies by the central bank in December 2023 has also played a key role in this momentum. “Since the banking ban was lifted, it has opened up a lot of possibilities for collaboration and smoother transactions,” Sodipo explained. Building on this, in June 2024, the Nigerian Securities and Exchange Commission (SEC) launched the Accelerated Regulatory Incubation Program (ARIP), which now requires all virtual asset service providers (VASPs) to register and undergo an assessment before being fully approved. “The industry is optimistic about the ARIP; it is a shift away from uncertainty and a positive step towards regulatory clarity,” said Sodipo.
Despite Nigeria’s progress with initiatives such as the ARIP, many financial institutions remain reluctant to fully engage in the cryptocurrency space due to lingering regulatory ambiguity. “Banks remain cautious and are waiting for clear signals from the central bank and the Securities and Exchange Commission before fully entering the market,” Sodipo explained.
Despite this, Nigeria’s cryptocurrency market continues to thrive. Looking ahead, Sodipo is optimistic about the future of cryptocurrency in Nigeria, especially with the ongoing regulatory reforms. “Open dialogue with regulators is key. We hope that further clarity will drive more banks and financial institutions to enter the space,” Sodipo said.
South Africa’s crypto market is booming, driven by growing institutional activity and TradFi participation
As Africa’s largest economy, South Africa has become one of the continent’s largest cryptocurrency markets, capturing approximately $26 billion in value over the past year. The number of licensed companies in South Africa has grown significantly and there is an increase in institutional-scale activity.
The chart below shows the increasing influence of institutional and professional-sized deals on South Africa, which have become the largest contributors to the total index value, particularly from the end of 2023 to the first quarter of 2024.
This connection between traditional finance and cryptocurrencies is particularly alive and well in South Africa. According to Rob Downes of the Absa Group, South Africa is at a critical juncture where traditional finance and digital assets are beginning to merge. “We are seeing growing interest from institutional clients, particularly in digital asset custody solutions, which will play a key role in supporting the crypto ecosystem here,” said Downes.
While institutional players drive the majority of market activity, retail and professional participation remains steady. To gain insight into the business landscape, we spoke to Carel van Wyk, founder of MoneyBadger, a company focused on integrating crypto payments for retailers. Van Wyk noted that the South African crypto market has been steadily maturing, especially in the payments space. “In the past, people have tried to do payments on-chain, but this is impractical because blockchain transactions can become expensive and unsuitable for small, fast transactions.” He spoke of advances in layer2 technology and payment APIs that are making crypto payments more suitable for everyday use, allowing retailers to accept crypto while settling in fiat currencies.
The FSCA’s decision to regulate crypto assets under existing financial laws has been a major catalyst for market growth. This has provided much-needed clarity for businesses and investors, enabled licensed firms to grow responsibly, and encouraged financial institutions to explore crypto services. “The regulatory environment here is relatively favorable compared to other regions. This gives us the confidence to explore more robust solutions such as custody and payments,” said Downes.
Trading pairs with the South African rand (ZAR) are also booming, with hundreds of millions of dollars traded each month.
The performance of the ZAR pair indicates the maturing of the South African crypto ecosystem, which Downes believes will drive further institutional participation. “We are seeing exchanges becoming more sophisticated, which is important in building trust with both retail and institutional investors,” he explained.
South Africa’s regulatory clarity and market growth have attracted the interest of financial institutions. Absa Group Bank, one of South Africa’s largest banks, is actively exploring blockchain and cryptocurrency initiatives. Downes stressed that Absa Group’s main focus is on providing institutional-grade crypto custody services, which they see as a key near-term opportunity. “The thing I’m most excited about — and our biggest near-term revenue opportunity — is custody,” Downes shared. Absa Group sees secure custody services as fundamental to institutional adoption of crypto, providing security and compliance to exchanges, investment firms, and other large market participants.
Absa Group and other South African banks have shown growing interest in participating in the crypto industry, despite challenges that remain in terms of risk management and compliance. Downes acknowledged that banks need to build trusted relationships with cryptocurrency exchanges and service providers to facilitate services such as banking and payments. Downes said Absa Group has taken a "learn and experiment" approach and has the support of leadership. "We have deliberately positioned our efforts to be relatively light-hearted and focused on learning and engaging with the market," Downes explained. This exploratory approach has enabled Absa Group to participate in regulatory sandboxes and work closely with regulators to ensure compliance while advancing its blockchain initiatives.
Client demand for crypto-related services is growing steadily. “Inquiries have tripled over the past 18 months,” Downes noted, adding that interest covers banking services for cryptocurrency payments, investments, and exchanges. Institutional clients, especially family offices and asset managers, are beginning to explore how to integrate digital assets into their portfolios. “It’s still relatively early days for traditional financial institutions in the crypto space, but client demand is driving us to move faster,” Downes added.
As banks like Absa Group continue to innovate and explore blockchain technology, they are helping to bridge the gap between traditional finance and cryptocurrency. “Traditional financial institutions are uniquely positioned to leverage our regulatory expertise and controls to help usher in blockchain-based finance,” Downes said. As the technology becomes more integrated, both corporate and consumer adoption will accelerate, further solidifying South Africa’s position in the global crypto economy.
Key Nodes in Sub-Saharan Africa
Despite Sub-Saharan Africa’s relatively small share of the global crypto economy, the region is seeing strong momentum. Nigeria and South Africa are leading the charge, driving significant on-chain activity and positioning the region as an increasingly influential hub for cryptocurrency adoption and financial technology.
Stablecoins have become a big part of the crypto story in Sub-Saharan Africa, a popular hedge against long-term inflation and currency debasement, and now account for the majority of crypto transactions across the continent. Meanwhile, DeFi is booming, with the region leading the way in global adoption of decentralized platforms.
While countries such as South Africa, Nigeria, Ghana, Mauritius and Seychelles have made significant progress in establishing regulatory frameworks, others are exploring regulatory pathways to cope with growing trading volumes and demand for crypto. As various market participants, including banks and other financial institutions, deepen their involvement, the need for clear regulation has never been more urgent.
Africa’s real-world crypto use cases offer valuable lessons for global markets. With a thriving fintech landscape, expanding mobile penetration, and the potential for collaboration between regulators, traditional finance (TradFi), and crypto companies, the continent is poised to become a global cryptocurrency leader and drive innovation and financial inclusion at scale.
Notes
1 Fiat currency remittance prices are derived from World Bank data for the first quarter of 2024 and are used to represent the average cost to remitters, which include banks, money transfer operators (MTOS), mobile operators, and post offices. For stablecoin remittances, the total cost calculation includes exchange deposit fees, transaction fees, transfer fees, and on-chain transactions for exchanges in Sub-Saharan Africa. Both methods take into account FX margin, which reflects the percentage difference between the remittance service provider's exchange rate and the interbank rate. For stablecoins, FX margin is calculated using the price difference between the closing price on September 18 and the mid-market rate at 12:00 AM UTC on September 19, provided by Wise.
2 The surge in institutional inflows from late 2023 to the first quarter was likely driven by the broad market rally sparked by the approval of a Bitcoin ETF in the U.S. and news that South Africa would issue its first Crypto Asset Service Provider (CASP) license, boosting sentiment that investments are regulated and protected.
