The adoption of stablecoins is soaring across Sub-Saharan Africa, now accounting for nearly half of the region’s total cryptocurrency transaction volume. This surge is largely driven by the devaluation of local currencies in countries such as Nigeria and Ethiopia, according to a report by blockchain analytics firm Chainalysis, released on October 2.
Stablecoins, which are digital assets pegged to stable fiat currencies like the U.S. dollar, currently represent approximately 43% of all crypto transactions in the region. Eric Jardine, Cybercrimes Research Lead at Chainalysis, highlighted the direct link between local currency instability and the increasing use of stablecoins.
“We’ve observed a strong correlation between currency devaluation and the rise in stablecoin adoption,” Jardine told Cointelegraph. “As local currencies lose their purchasing power, it makes sense that more people would turn to USD-pegged stablecoins for more stability.”
However, Jardine also noted that stablecoin use can grow even in countries not experiencing significant devaluation, indicating a broader trend in adoption across the region.
Nigeria Leads in Stablecoin Transactions
Nigeria, which continues to be a major player in the global crypto market, has seen its local currency, the naira, undergo significant devaluation, further fueling the rise in stablecoin usage. Between July 2023 and June 2024, Nigeria processed approximately $59 billion in cryptocurrency transactions, with about 85% of transfers valued at under $1 million, indicating a strong presence of smaller retail and professional transactions.
Chainalysis revealed that Nigeria is the leading country in the region in terms of stablecoin inflows, with inflows increasing significantly as the naira depreciates. These trends reflect how stablecoins are becoming essential tools for Nigerians, particularly during times of economic instability.
Ethiopia’s Rapid Growth in Stablecoin Adoption
Ethiopia is also seeing a sharp increase in stablecoin use, ranking as the fastest-growing market for retail-sized stablecoin transfers in Africa. Over the past year, the country has experienced a 180% year-over-year growth in this sector. The Ethiopian birr (ETB) lost 30% of its value in July 2024 after the government eased currency restrictions to secure support from the International Monetary Fund (IMF). As a result, more Ethiopians are turning to stablecoins as a safeguard against their weakening currency.
Maurice, a financial expert cited by Chainalysis, explained that stablecoins are essentially a “proxy for the dollar.” He noted, “If you can get into USDT or USDC, you can easily swap that for hard dollars elsewhere,” making stablecoins a critical tool for businesses engaged in international trade.
South Africa’s Institutional Shift Toward Stablecoins
In South Africa, stablecoins have overtaken Bitcoin as the most widely received cryptocurrency in recent months. Rob Downes from financial services firm Absa Group pointed out that institutional clients are increasingly adopting stablecoins to manage liquidity and mitigate exposure to volatile local currencies. “Stablecoins are proving to be a game changer,” Downes said, particularly for managing financial risks in a fluctuating economy.
Africa’s Crypto Market Set to Lead
Chainalysis concluded that Africa’s real-world use of cryptocurrency, particularly stablecoins, offers important insights for the global market. With rising adoption rates, the report suggests that the continent is well-positioned to become a global leader in cryptocurrency innovation, particularly in regions where economic instability drives the need for more secure and stable financial tools.