As companies shift to dollar-linked options, stablecoins now account for more than 40% of the cryptocurrency economy in Sub-Saharan Africa.
Stablecoins have emerged as a vital component of the cryptocurrency economy in Sub-Saharan Africa, accounting for about 43% of the region’s total transaction volume, according to a recent study. a report From Chainalysis.
In countries grappling with volatile local currencies and limited access to the US dollar, dollar-pegged stablecoins such as Tether (USDT) and Circle (USDC) have gained popularity, enabling businesses and individuals to store value, facilitate international payments, and support cross-border transactions. commerce.
Commenting on Chainalysis, Chris Morris, CEO of Yellow Card, said: “About 70% of African countries are facing foreign exchange shortages, and businesses are struggling to access the dollars they need to operate.”
Stablecoins will become the primary use case for cryptocurrencies in South Africa
As a result of this conflict, Ethiopia, Africa’s second most populous country, has seen retail-sized stablecoin remittances grow 180% year-on-year, driven by a recent 30% devaluation of its local currency, the birr.
While traditional financial institutions struggle to meet demand for the US dollar, stablecoins are increasingly seen as a “proxy for the dollar,” Morris said, adding that “if you can get into USDT or USDC, you can easily exchange that for hard dollars elsewhere.” “.
Looking to the future, Rob Downes, head of digital assets at ABSA Bank, a major African bank operating in 12 African countries, expects stablecoins to play a pivotal role in Africa’s economic landscape, noting that dollar-pegged tokens will be the “primary use case.” For cryptocurrencies in South Africa over the next three to five years.