Crypto: Currency Devaluation Boosts The Adoption Of Stablecoins In Africa!

Sub-Saharan Africa is experiencing a growing adoption of stablecoins, a trend primarily driven by the ongoing devaluation of local currencies, particularly in Nigeria and Ethiopia. According to a recent report by Chainalysis, stablecoin transactions now account for 43% of the total crypto transaction volume in the region.

Currency Devaluation: A Key Factor in Crypto Adoption

The devaluation of local currencies has pushed many individuals and businesses to seek more stable alternatives to preserve their wealth. Stablecoins, which are cryptos backed by stable assets like the US dollar, offer an attractive solution. They help bypass the extreme fluctuations of local currencies and maintain the value of financial assets.

For instance, Nigeria remains a global leader in crypto adoption, with approximately 59 billion dollars worth of transactions between July 2023 and June 2024. About 85% of transfers, mainly retail and professional, are below 1 million dollars. The devaluation of the naira has accentuated this trend.

In Ethiopia, ranked 26th in crypto adoption, the stablecoin market is experiencing the fastest growth in Africa, with an increase of 180% year-over-year. In July, the birr lost 30% of its value after the easing of monetary restrictions to gain IMF support.

Future Prospects

Eric Jardine, head of cybercrime research at Chainalysis, explained that the adoption of stablecoins is closely linked to the devaluation of local currencies. He added that this crypto adoption could grow rapidly whenever local currencies lose value, but it can also increase outside of these circumstances.

a similar trend in South Africa, where institutional clients state that stablecoins are a “game changer” for liquidity management and reducing exposure to currency volatility.

In conclusion, the adoption of stablecoins in sub-Saharan Africa, fueled by currency devaluation, is transforming the financial landscape. This crypto trend promises to enhance economic stability and offer viable solutions to regional monetary challenges.