Chainalysis: Stablecoins represent 40% of crypto economy in Sub-Saharan Africa

As businesses increasingly seek dollar-pegged alternatives, stablecoins now account for over 40% of Sub-Saharan Africa’s crypto economy.

According to a recent report from Chainalysis, stablecoins have become a crucial part of the region’s crypto landscape, representing approximately 43% of total transaction volume. In countries facing volatile local currencies and limited access to U.S. dollars, dollar-pegged stablecoins like Tether and Circle’s USDC have become popular. They allow businesses and individuals to store value, facilitate international payments, and enhance cross-border trade.

Chris Maurice, CEO of Yellow Card, noted in a commentary to Chainalysis that “around 70% of African countries are experiencing a foreign exchange shortage, making it difficult for businesses to access the dollars they need to operate.”

Stablecoins to become primary use case for crypto in South Africa

As a consequence of these challenges, Ethiopia, Africa’s second-most populous country, has experienced a remarkable 180% year-over-year increase in retail-sized stablecoin transfers, driven by a recent 30% devaluation of its local currency, the birr.

With traditional financial institutions struggling to meet the demand for U.S. dollars, stablecoins are increasingly regarded as a “proxy for the dollar,” according to Maurice. He emphasized that “if you can acquire USDT or USDC, you can easily convert that into hard dollars elsewhere.”

Looking ahead, Rob Downes, head of digital assets at ABSA Bank—a major African bank operating in 12 countries—anticipates that stablecoins will play a crucial role in Africa’s economic landscape. He stated that dollar-pegged tokens are likely to become the “primary use case for crypto in South Africa over the next three to five years.”