Stablecoins now constitute 43% of cryptocurrency transactions in Sub-Saharan Africa, according to a report by Chainalysis.
Currency devaluation in Nigeria and Ethiopia has contributed to the growing adoption of stablecoins.
Due to currency devaluation, stablecoin transactions now account for nearly half of the transaction volume in Sub-Saharan Africa.
In its latest report on the African crypto market, published on October 2, Chainalysis states that stablecoins account for roughly 43% of the total transaction volume in Sub-Saharan Africa.
“We have repeatedly noted an association between currency devaluation and stablecoin adoption,” Eric Jardine, Cybercrimes Research Lead at Chainalysis, told the press.
He added that the key to understanding this association “is the direction of the causal arrow, which points from deteriorating purchasing power in local fiat terms to USD stablecoin adoption.”
“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.”
Nigeria has maintained its position as a top global player in crypto adoption, as reported by the blockchain research firm.
According to the report, Nigeria saw approximately $59 billion in crypto transactions from July 2023 to June 2024.
Additionally, approximately 85% of the transfer value in Nigeria falls under $1 million, indicating a prevalence of smaller retail and professional transactions.
The country also topped the list for stablecoins received, a result of the Naira’s 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 co-founder and CEO of African crypto exchange Yellow Card, Chris Maurice.
“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,” confirmed Chainalysis.
Ethiopia, which ranks 26th in crypto adoption, is witnessing a similar trend, according to Chainalysis.
With a 180% annual growth rate, Ethiopia is currently becoming Africa’s fastest-growing market for retail-sized stablecoin transfers.
After the government relaxed currency restrictions in July to secure International Monetary Fund (IMF) support, the Ethiopian birr (ETB) lost 30% of its value.
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According to Maurice, stablecoins act as a substitute for the dollar. He explained, “If you can get into USDT or USDC, you can easily swap that into hard dollars elsewhere,” highlighting their importance for companies involved in global trade.
Rob Downes of Absa Group, a financial services firm, noted a similar trend among institutional clients in South Africa, with stablecoins being described 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 said.
According to Chainalysis, stablecoins have recently outpaced Bitcoin to become the leading cryptocurrency received in South Africa.
Chainalysis concluded that Africa’s real-world crypto use cases “carry valuable lessons for the global market” and added that the continent is “well-positioned to emerge as a global crypto leader.”
