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Cryptocurrency News Articles
Stablecoins Now Represent Over 40% of Sub-Saharan Africa's Crypto Economy
Oct 03, 2024 at 08:54 am
Stablecoins have emerged as a vital component of Sub-Saharan Africa's crypto economy, accounting for approximately 43% of the region's total transaction volume.
Stablecoins now account for over 40% of Sub-Saharan Africa’s crypto economy, highlighting their increasing importance in the region's digital asset landscape.
A recent report by Chainalysis reveals that stablecoins, digital currencies pegged to fiat currencies like the U.S. dollar, now constitute a significant portion of Sub-Saharan Africa's crypto economy.
According to the report, stablecoins now account for approximately 43% of the region's total cryptocurrency transaction volume. This surge in stablecoin adoption is largely attributed to the presence of several nations within the region that are grappling with volatile local currencies and limited access to the U.S. dollar.
In these nations, dollar-pegged stablecoins, such as Tether (USDT) and Circle (USDC), have emerged as a vital tool for businesses and individuals seeking to store value, facilitate international payments and bolster cross-border trade.
Highlighting the significance of stablecoins in Sub-Saharan Africa, Yellow Card chief executive Chris Maurice stated, “About 70% of African countries are facing an FX shortage, and businesses are struggling to get access to the dollars they need to operate.”
Surging retail-sized stablecoin transfers in Ethiopia
In a commentary to Chainalysis, Maurice noted the increasing demand for stablecoins, particularly in nations with limited access to U.S. dollars.
For instance, Ethiopia, Africa's second-most populous nation, has witnessed an 180% year-over-year growth in retail-sized stablecoin transfers, largely driven by a recent 30% devaluation of its local currency, the birr.
As traditional financial institutions continue to struggle to meet the demand for U.S. dollars, stablecoins are emerging as a "proxy for the dollar," Maurice added.
“If you can get into USDT or USDC, you can easily swap that into hard dollars elsewhere,” he said.
Looking ahead, Rob Downes, head of digital assets at ABSA Bank, a major African bank operating in 12 African countries, anticipates that stablecoins will play a pivotal role in Africa's economic landscape.
According to Downes, dollar-pegged tokens are poised to become the “primary use case for crypto in South Africa over the next three to five years.”
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