If you’ve ever watched a really good TV show, you’ll know every great episode has two stories. There’s the A-story that everyone is watching. It’s where the big action happens, the major decisions are made, and the main characters either win, lose, or leave you hanging until the next episode.

Then there’s the B-story. It’s quieter. Easy to overlook. But more often than not, it’s the one that quietly shapes what happens next. That’s exactly what’s happening in the stablecoin world right now. Over the past few weeks, the A-story has been impossible to miss. From partnership announcements to product launches, fresh funding rounds, and new players entering the race, every day seems to bring another headline about stablecoins gaining momentum.

But while everyone’s been watching that unfold, a far more consequential B-story has been playing out in the background: regulation. At first glance, it might look like regulators are stepping in to slow the industry’s momentum. But that’s probably the wrong way to read it. What’s really happening is that stablecoins are being pulled out of the regulatory grey zone and into the mainstream financial system. And with that come clearer rules, stronger safeguards, greater accountability, and ultimately, more legitimacy for everyone involved.

The EU’s MiCA Deadline as a Filtration Mechanism

On July 1, 2026, the EU’s MiCA transitional period closed. From that date, any crypto-asset service provider (CASP) without a MiCA licence had to begin an orderly winddown of EU services or face fines of up to €5 million for individuals and 12.5% of annual turnover for firms.

Before July 1, roughly 1,200 to 3,000 firms were operating under national registrations. But only around 300 currently hold a valid CASP authorisation. Even Binance, the world’s largest exchange, withdrew its Greek licence application days before the deadline and suspended new sign-ups to refile elsewhere, leaving over 40 million users worrying about their status.

That sharp contraction in the number of operators is a sorting mechanism to ensure only compliant operators continue to grow and gain market share. Roughly 70% of EU crypto transactions now occur on MiCA-compliant exchanges, a share that will rise as unlicensed platforms exit the market.

For Euro-denominated stablecoins like Circle’s EURC and Banking Circle’s EURI, this is a boon. A single passport valid across 27 member states is a genuine competitive asset once you hold it. The firms that survive the shake-up emerge with a credibility signal that unlicensed operators can never buy, which is exactly why banks and institutional counterparties are more willing to work with them.

Conversely, Tether’s USDT was progressively delisted from EEA spot markets over the past year due to its decision not to apply for a license. This may explain Tether’s spree of partnerships with African operators like LemFi, Shiga, Kotani Pay, Busha and others as it seeks distribution into new markets.

The takeaway for the African stablecoin ecosystem is that regulatory actions now have global spillover effects and positioning to take advantage of these should be an active part of their strategy.

What the GENIUS and CLARITY Acts Bring

In the US, federal regulators missed the GENIUS Act’s 18 July deadline to finalise implementing rules on reserve assets, custody, redemption, and AML compliance for stablecoin issuers.

The statutory compliance deadline of January 2027 has not moved, so issuers are now building compliance programmes against proposed rules that could still change, with BlackRock lobbying the OCC to loosen the proposed cap on tokenised reserve assets.

A few years ago, BlackRock advocating for digital asset regulation would be unthinkable because many clients weren’t interested in Bitcoin and similar assets. But since the signing of the GENIUS Act in July 2025, the global stablecoin market cap has grown to over $320 billion, up from $259.7 billion.

Notably, this growth occurred without final rules: the GENIUS Act reached its first anniversary in July 2026, with no final rules published by regulators, and full regulatory effect now shifts to January 18, 2027. So, the “impact” so far is mostly the signalling effect of legal certainty (institutional confidence, bank/payments-firm entry) rather than enforced supervision, which has brought many institutional operators into the ecosystem.

Similarly, the Senate Banking Committee advanced the Digital Asset Market CLARITY Act in May, assigning payment stablecoins to banking regulators under the GENIUS Act framework, banning passive yield on digital wallets while permitting transaction-based rewards, and requiring digital commodities to be treated as customer property rather than unsecured claims in a bankruptcy.

This is already shaping how issuers structure products, operations, and partnerships, as the direction of travel is now clear enough that building ahead of the final regulation carries less risk than waiting for it.

Africa’s Compliance Bar Is Rising and So Is the Ambition of Its Operators

Across the continent, a slew of laws, orders and regulations have been passed over the last six months. In recent weeks, Nigeria and Kenya have moved towards implementation in different ways. Nigeria’s President signed an Executive Order on Virtual Assets Coordination on 17 July. The government is creating a CBN-chaired Virtual Asset Council to harmonise a regulatory landscape it describes as fragmented across tax, securities, and financial-stability mandates.

The new framework would complement the Investment and Securities Act 2025, which was arguably the biggest crypto-friendly move in Nigeria. For a $92 billion stablecoin market, this level of order, notwithstanding concerns around regulatory efforts duplication, recognises the significant shift of digital assets from speculative interest to institutional payment infrastructure.

In Kenya, the gazetted Virtual Asset Service Providers (VASPs) Regulations 2026 set a paid-up capital floor of KSh300 million (about $2.3 million) for stablecoin issuers. It also prohibits stablecoin issuers from paying interest, and gives every operator already active in the market, including Luno, Busha, Kotani Pay, and Binance, until 4 November to secure a licence.

Separately, new VASP rules now let investigators seize crypto wallets, seed phrases, and hardware devices and convert frozen assets into fiat to preserve their value during investigations. The Central Bank of Kenya and Capital Markets Authority split supervision between fiat conversion and stablecoin issuance on one hand, and exchanges, tokenisation, and ICOs, on the other. This brings crypto firms toward the governance standards long applied to banks: independent directors, cybersecurity audits, and seven-year record retention.

In the past, global standard-setters like the IMF and FATF have flagged the risks of a lack of regulatory clarity, leading to the development of grey market operations with the attendant AML/CFT challenges.

Recent regulatory efforts like the ones above have led to countries like Nigeria and South Africa exiting the FATF grey list. The benefits to operators include lower cost of capital and reduced friction as they no longer face enhanced due diligence requirements from correspondent banks and counterparties, which normally drive up transaction costs and slow settlement times across corridors.

Moreover, this new generation of rules harmonising globally makes stablecoins usable by the banks, trade financiers, and remittance corridors that regulatory uncertainty has kept on the sidelines until now.

💡 KEY INSIGHT

Every market in this edition is tightening the rules around stablecoins, but not for the same reasons. Nigeria is focused on monetary sovereignty and attracting the right kind of investment. Kenya is doubling down on AML compliance. The EU is protecting market integrity, while the US is prioritising financial stability. Every new law, licensing regime, sandbox, or compliance deadline forces the market to sort itself out. Unlicensed, undercapitalised, or opaque operators either adapt or disappear.

Those that make it through don’t just earn regulatory approval; they earn something even more valuable: credibility. And in today’s financial system, credibility is currency. It opens doors to banking partners, institutional capital, and cross-border opportunities that the industry’s early, lightly regulated days simply couldn’t offer. So while regulation may feel like a short-term speed bump, it’s increasingly proving to be the infrastructure that will support stablecoins’ long-term adoption.

What Comes Next?

Four dates now anchor the next phase of stablecoin regulation, and each is worth tracking for what it reveals about enforcement capacity as much as policy intent.

● 4 November 2026: Kenya’s licensing deadline arrives against a process that has issued zero licences to date, the first real test of whether a regulator can build a licensed market from nothing in three months.

● 18 January 2027: The GENIUS Act’s compliance deadline in the US, which will land with or without finalised implementing rules from the Treasury, OCC, FDIC, Fed, and NCUA.

● 25 October 2027: The UK’s cryptoasset regime expands to its full scope, giving firms roughly 16 months from the June policy statements to prepare authorisation applications.

● May / June 2027: First reporting deadlines and automatic cross-border data exchanges between participating global tax authorities for the Crypto-Asset Reporting Framework (CARF); an international tax transparency standard created by the OECD to automate the collection and exchange of cryptocurrency transaction data.

● Ongoing: Nigeria’s Virtual Asset Council begins the harder work of turning a coordination mandate into practice across the CBN, SEC, and tax authorities.

None of these deadlines guarantees a smooth outcome. Kenya’s own capital floor could still push builders elsewhere, MiCA’s authorisation backlog could take until 2027 to clear, and the GENIUS Act’s final rules could still surprise issuers who built to the proposed version.

However, the direction across every market covered here shows regulators have moved from asking whether to bring stablecoins into the perimeter, only how quickly and in what way.

Edited by: Kolawole Omobusola

In 2022, Kay was concluding a freelance contract with a U.S. client and asked to be paid in USDT instead of routing the invoice through the usual international transfer.

He’d grown tired of losing income to hidden platform fees, bank charges, and an official exchange rate that meant the Naira landing in his account was always smaller than the dollar amount agreed.

According to him:

“It just did not make sense to spend all of that on the little money I was withdrawing.”

He further added that:

“The use case for me was simply to avoid being legally cheated by platform fees and exchange rates.”

For Kay, asking to be paid in USDT wasn’t a bet on the future of money, simply a way to stop losing his own.

That’s the kind of moment the Jobs-to-Be-Done theory is built to explain. Developed by the late Harvard Business School professor Clayton Christensen and popularised for product teams through Tony Ulwick’s outcome-driven innovation work, the framework argues that people don’t buy products — they “hire” them to make progress on something happening in their life.

Using this framework, a stablecoin’s real competition isn’t another stablecoin but the alternative system of bank transfers, a parallel-market forex dealer, or a payment platform quietly eating into a freelancer’s invoice.

For this edition, we spoke to some stablecoin users across Africa to understand what jobs they’re hiring stablecoins to do and how well the assets do them.

Job One: Help me get paid without losing time and money to the system

For Kay, the job started with cross-border freelance income and never really finished because what began as a workaround became his default way of transacting.

In 2026, he now receives his salary directly in USDT (the most popular digital dollar among Africans) via the Quidax Exchange. He also uses global platforms like Binance and Bybit for occasional rate comparisons.

There was nervousness early on:

“I had the theoretical knowledge, but because it wasn’t a familiar terrain, I was overly careful,” he says.

This was a vivid description of how he’d triple-check every character of a wallet address in the beginning to ensure he didn’t lose money to the irreversibility of crypto transactions.

Beth arrived at the same job from a different angle. According to her:

“My first-ever time owning a stablecoin was getting paid with it. It was the default payment method, so I had no choice, type of thing.”

Although she found usage confusing initially, she has grown comfortable with repeated use through Quidax and Binance.

Where the two diverge is in what the job is actually worth. Kay frames it almost entirely around what he avoids: bank fees, platform charges, an unfavourable official rate, and transfer costs as low as 1 USDT.

That tracks, as Sub-Saharan Africa is one of the world’s most expensive places to move money, averaging an 8.78% cost per $200 sent against a 6.49% global average.

He also points to speed: using cross-border bank transfers used to take three days to a week; now, with stablecoins, this takes seconds, down from the 30–40 minutes P2P trading used to take when Kay started a few years ago.

To Beth, holding USDT feels like holding dollars, and converting to Naira is simple, but the spread eats into the convenience. Her instinct is common: a BVNK-Coinbase-Artemis survey found 95% of Nigerian crypto users would rather be paid in stablecoins than Naira, a rational response to FX shortages and currency volatility across much of the continent.

Job Two: I need to hedge against value erosion and reach markets my local currency can’t touch.

Phil’s first stablecoin transaction wasn’t really about stablecoins. It was 2017, Ripple’s XRP was having its moment, and the only way in was through an over-the-counter dealer called Naira X, since almost no platforms traded in Naira pairs then.

The process was entirely manual: email your proof of payment, hand over a wallet address, and wait.

While explaining the process, he said:

“You go via email, send them the screenshot that you’ve made the transfer, the evidence of payment, the amount, and then you add your wallet address.”

But, there was no recourse if it went wrong. He says:

“I was literally banking on hope that they wouldn’t take my money and go.”

The job that started as a way into a speculative trade has settled into something else: a hedge and a gateway.

“USDT is basically a hedge for me, my gateway to creating or storing wealth, my gateway to the global financial market.”

Phil holds stablecoins because they do something the Naira structurally can’t: preserve value and open access to dollar-priced markets.

That the rationale transformed to “hedging” is worth noting for operators. It proves that user motives shift over a product’s lifecycle, and reading a long-term holder’s current explanation as their original one is a mistake.

What’s changed most for Phil is the ease of access.

According to him:

“The difference is so glaring. I no longer have to send an email with payment proof to some guy and just hope to God.”

Where the earlier job ran on trust in a stranger, it now runs on infrastructure, an exchange, and settlement in the blink of an eye.

That mirrors the sector’s growth from a time when a network of informal dealers and unlicensed exchanges controlled the markets to a period when it’s now one of the fastest-growing stablecoin markets globally.

Phil’s concerns are structural rather than transactional. Depegging risk is real: what happens to a dollar-pegged asset if the dollar stops being the reserve currency of choice?

There’s also no equivalent of deposit insurance for long-term holders, and the irreversibility of stablecoin transactions is a big challenge.

Phil says:“

If I send stablecoin to a wallet, and even a letter is missing from that address, it cannot be reversed. In traditional finance, if I send funds to the wrong place, I can get my money back. In stablecoins, it just doesn’t apply.”

That’s the same fear Kay described while learning to use cryptocurrencies and having to “check every letter and number in his wallet address.” As the ecosystem has matured with improved regulatory clarity, recourse mechanisms are now required on regulated crypto platforms.

How Jobs Done Create New Jobs

Solving one job well tends to expose the next. For Beth, converting USDT to USD through Naira left her with noticeably less than expected, a loss from compounding conversion costs rather than any single bad transaction.

She said, “I wish I could just pay for stuff I buy directly with USDT. That would be so cool.” That’s where stablecoin usage across Africa usually meets reality.

Turning stablecoin value into something a merchant in Nairobi or Accra can accept requires bridging blockchain rails to mobile money and agent networks. Startups like KotaniPay, which connects stablecoin rails to M-Pesa and Airtel Money, and Accrue, a USD-stablecoin agent network spanning more than a dozen African countries, are building to close that gap.

Kay further mentioned a friction that sits outside the transaction entirely: getting paid in stablecoins can make it harder to access loans. African lenders still largely underwrite consumer credit against domestic currency salaries or deposits.

While sharing that pain point, he says:

“Many traditional lenders still shy away from offering credit facilities to cryptocurrency earners. If your salary is not paid in Naira, they will most likely not offer you anything.”

Solving the payments problem, in other words, quietly created a credit problem.

Venture firm a16z has flagged credit as one of the next growth areas for stablecoins once the payments infrastructure matures, and some African operators are already moving in this direction.

Busha, one of Nigeria’s licensed digital asset platforms, added crypto-backed loans to its stack this year: offering up to 50% loan-to-value against Bitcoin and Solana holdings, at 2% monthly interest, without requiring users to sell their crypto holdings.

It’s a structurally different answer to Kay’s challenge of getting banks to recognise crypto income and more lenders to underwrite a stablecoin salary the way they would a Naira one.

With the Busha structure, borrowers’ crypto holdings become collateral. For Kay and earners like him, the hope is that as regulation matures and institutional adoption grows, more operators build credit products around the assets people transact or get paid in, rather than waiting for legacy underwriting to catch up.

What’s Next?

Kay, Beth, and Phil describe the stablecoin leg of their transactions as reliable. Any failings they have experienced in using stablecoins have been market-based and structural rather than technical.

Stablecoins, on the evidence of these users, have already done the job they were originally hired for. The new jobs of last-mile acceptance, credit, and insurance against their own structural risks present new opportunities for African stablecoin operators.

Stay tuned for the next edition of Stablecoin Digest, a Builders in Fintech Column.

Edited by: Kolawole Omobusola

For most of its short history, Africa’s stablecoin story has been driven by demand. A trader in Accra holds USDT to hedge a weakening cedi. An importer in Nairobi settles cross-border invoices without the cost and delays of correspondent banking. According to Yellow Card, stablecoins now account for 43% of cryptocurrency transaction volume in Sub-Saharan Africa, showing that demand is already established across the region.

This edition moves beyond the demand story to examine what comes next. As demand becomes established, this week’s developments suggest that institutional credibility is becoming the next competitive advantage.

The Week’s Moves: Two Operators, One Direction

This past week produced two headline developments that, on their own, look like routine business news. Together, they reveal where the market is headed.

• Yellow Card secured Swiss regulatory approval. On June 23, Yellow Card announced it had obtained AML affiliation in Switzerland as a supervised financial intermediary, establishing a permanent base in Lugano. The approval gives institutional and corporate clients a single regulated counterparty through which they can access Yellow Card’s stablecoin infrastructure across its operating markets, instead of navigating licences across more than 50 markets. It is another step in the company’s shift towards B2B infrastructure.

• Ripple took an equity stake in Flutterwave. On June 16, Flutterwave announced a strategic investment from Ripple as part of its Series E round, valuing the company at $3.2 billion. The deal embeds Ripple’s NYDFS-approved RLUSD stablecoin and the XRP Ledger into Flutterwave’s payment infrastructure, with Nigeria as the first market. Flutterwave has processed more than $50 billion across one billion transactions, giving RLUSD a distribution network it could not have built on its own. For Flutterwave, the partnership also strengthens its institutional credentials through Ripple’s regulatory standing in the US and Europe.

Yellow Card in Lugano: What the Swiss Move Actually Signals

Seven months ago, Yellow Card made a decision that raised eyebrows. As TechCabal reported in November 2025, the company shut down its retail trading app to focus entirely on B2B infrastructure. That decision now makes sense. Yellow Card recently revealed that 99% of its business is in stablecoins, with enterprise use cases such as treasury management, cross-border payments, and supplier settlements driving most of its transaction volume.

The Swiss regulatory approval is the next step in that strategy. It gives institutional customers a single regulated counterparty through which they can access Yellow Card’s operations across Africa. The choice of Lugano is also strategic. The city has positioned itself as a global hub for digital financial infrastructure with initiatives like Plan ₿ through its Tether partnership, and last year’s CHF100 million blockchain bond issuance. As Nigerian fintech operators know too well, supportive regulation matters.

Regulatory credibility and operational reach are two different value propositions. Yellow Card is positioning itself as one of the few African operators that can offer both. For global institutions looking at African stablecoin infrastructure, that removes one of the biggest barriers to engagement. The Swiss approval removes one of the last structural objections a compliance officer at a G-SIB Tier 1 bank would raise before engaging.

Ripple and Flutterwave: The Distribution Problem, Solved

To understand the Ripple–Flutterwave deal, start with RLUSD’s challenge. Ripple’s stablecoin is NYDFS-approved, fully fiat-backed, and backed by a level of regulatory credibility that USDT (the dominant stablecoin in Africa, accounting for about 85% of transactions) does not have. But regulatory credibility without distribution is not enough. USDT’s advantage has never been regulation; it has been network effects. Merchants accept it, platforms support it, and users already hold it.

Flutterwave solves that distribution problem almost overnight. The company has processed more than $50 billion across one billion transactions, raised over $500 million, and already operates payment and remittance infrastructure across the continent. More importantly, it has spent the past year building a stablecoin-native stack through partnerships with Polygon (October 2025), Circle’s Payment Network, Kulipa - for its issued stablecoin cards (April 2026), and Tempo for its settlement layer (June 4, 2026).

Based on their official announcement, the partnership is built on three pillars:

• RLUSD is embedded into Flutterwave’s payment rails and Send App’s remittance corridors as a primary settlement asset.

• The XRP Ledger for faster settlement on cross-border payment corridors.

• A unified API connecting Flutterwave’s domestic network with Ripple Payments, allowing RLUSD to operate within existing merchant and remittance workflows rather than through a separate crypto stack.

What This Means for the Ecosystem

The two developments point to a broader shift that has been building over the past 18 months: Africa’s leading stablecoin operators are moving from proving that stablecoin rails work to proving they can be trusted by global institutions.

The timing matters. South Africa’s SARB has classified stablecoins as an emerging financial stability risk, while the IMF has raised concerns about monetary sovereignty and financial integrity in Nigeria. At the same time, global stablecoin transaction volumes reached $28 trillion in 2025. Stablecoin infrastructure is no longer peripheral to finance, and the institutions entering the market expect compliance standards that domestic-only operators cannot easily meet.

This creates three implications worth watching.

For operators, regulatory credibility is becoming a competitive advantage. Frameworks like Switzerland’s and MiCA are becoming the benchmark for attracting Tier 1 bank partnerships, multinational treasury business, and institutional settlement flows. Yellow Card has moved first in Africa. Others will likely follow, or risk missing the institutional market.

For stablecoin issuers, the Flutterwave deal shows what distribution in Africa really requires: deep integration into existing payment infrastructure, not another consumer app. RLUSD needed Flutterwave’s distribution more than Flutterwave needed RLUSD. That says a great deal about where leverage sits in Africa’s stablecoin market.

For regulators, the message is clear. Leading operators are not waiting for domestic stablecoin frameworks to emerge. They are building credibility through international licences and jurisdictions with established rules. With Africa’s cross-border payments market projected to reach $1 trillion by 2035, the question is no longer whether regulation is needed, but who will shape it. As argued in Stablecoin Digest 2, a coordinated continental framework, or collaboration between regulators across key payment corridors, would be the most effective path. Such a framework should prioritise reserve transparency, embedded supervision, and strong AML/CFT standards, while drawing on established regimes like MiCA, the FCA, and the US GENIUS Act.

What’s Next?

The pattern established this week is becoming clear. African operators are building upstream towards institutional trust, while global issuers are building downstream into African distribution. Together, they point to the next phase of Africa’s stablecoin market.

The operators that build institutional credibility first will be best placed to attract capital, partnerships, and global payment flows. And the regulators that engage now, while the market is still taking shape, will have greater influence over the standards that define it.

Stay tuned for the next edition of Stablecoin Digest, a Builders in Fintech column.

Edited by: Elizabeth Ajao

As funding, product launches, and partnerships outpace guardrails, a call for caution.

This edition steps back from “why” stablecoins are spreading in Africa to ask a harder question: what happens when a financial instrument grows this fast, this publicly, and this close to people’s everyday money? It’s a familiar pattern to anyone who has watched an asset class fall in love with itself. The question is whether Africa’s stablecoin ecosystem can avoid the worst version of that story.

The Pattern of Growth: Capital and Enthusiasm Are Moving Faster Than the Rails Can Settle

The last few weeks have produced one funding or partnership announcement after another, often from the same handful of companies, often within days of each other.

• Tether funded a remittance platform: On 18 May 2026, Tether invested in LemFi. The deal embeds USDT as a settlement layer across LemFi’s corridors, replacing multi-day SWIFT chains with near-instant transfers. Days later, LemFi closed a $30 million Series B extension, pushing its total raised past $85 million since 2021.

• Paga ran two plays in five weeks: On 8 May, Paga partnered with the Sui blockchain to put its $1.5 billion in monthly payment volume on a path to crypto-native settlement. On 10 June, it followed up with a bidirectional stablecoin bridge with Crossmint, wiring its local fiat on- and off-ramps directly into Crossmint’s enterprise payout network spanning 50+ blockchains.

• Flutterwave has now made six stablecoin moves in eight months: After Polygon (October 2025), Turnkey/Nuvion merchant wallets (January 2026), Circle Payment Network membership, Kulipa stablecoin cards (April), and Tempo as a second settlement layer (4 June), Ripple has now taken an equity stake in Flutterwave’s Series E, a round valuing the company at roughly $3.2–3.3 billion. The CEO is forecasting at least a 30% jump in stablecoin volumes from the Ripple tie-up alone.

• The stablecoin concentration: Excluding Paymentology’s $175 million round, African startups raised just $53 million in May 2026, of which around 70% came from three stablecoin infrastructure companies closing deals within the same week, including Tanzania’s Nala, securing $50 million in debt to expand its cross-border stablecoin rails.

The broader demand data backs the enthusiasm to an extent. The IMF’s new ‘Stablecoins in Nigeria’ report, published this week, shows that Nigeria received roughly $59 billion in crypto-asset inflows between July 2023 and June 2024 and now accounts for about 60% of all stablecoin inflows into sub-Saharan Africa since 2019.

Now, let’s get into the granular details.

Nigeria’s Stablecoin Flows Mirror Policy and Market Events

The primary drivers of the high stablecoin demand in Nigeria are domestic macroeconomic distortions, such as currency depreciation and policy changes. In addition, structural issues like the cost and time inefficiencies of remittance, international trade, and treasury management are constant sources of stablecoins’ demand.

From the chart, different events coincided with a surge in digital dollars among Nigerians. Could this be why the IMF warned in its report that Nigeria’s stablecoin boom is a huge risk for the naira?

However, the question is no longer whether the demand is real. Now, it’s whether growth is sustainable at this pace, and the gap between real demand and sustainable growth is exactly where some asset classes that boomed in the past have gone wrong.

When Enthusiasm Outruns Fundamentals: A Short History Lesson

The Bank for International Settlements (BIS) frames the present stablecoin moment against a much older pattern, where periods of financial innovation attract more capital than the underlying risk controls can absorb. This echoes what economists like Irving Fisher and Hyman Minsky call the financial instability hypothesis: from euphoria to overextension, and then a reckoning.

Two historic crypto events show us this pattern:

• Terra/UST in May 2022. An algorithmic stablecoin with no fiat backing, propped up by an unsustainable 20% yield product, reached a combined market value with its sister token LUNA of over $40 billion at its peak. When redemptions accelerated, the algorithm’s mint-and-burn mechanism turned into a death spiral. LUNA’s supply exploded from roughly 340 million tokens to over 6.5 trillion within days, and an estimated $40 billion in value evaporated in under a week.

• Circle’s USDC in March 2023. This is the more uncomfortable example, because USDC was the “responsible” stablecoin, fiat-backed, regularly audited, issued by a regulated US company. When Silicon Valley Bank collapsed, Circle disclosed that $3.3 billion, roughly 8% of USDC’s reserves, was stuck at the failed bank.

The stablecoin fell to as low as $0.87 within hours. It recovered days later, but the episode proved that even fully disclosed, well-regulated stablecoins are exposed to risks entirely outside their own balance sheets, including the health of banking partners.

From the image above, we can also see the higher demand for USDT over USDC, which poses a concentration risk around Tether’s dominance of the stablecoin market in Nigeria and Africa, where it accounts for about 85% of transactions.

How This Could Happen Inside the Stablecoin Ecosystem Itself

There are really three distinct failure modes stablecoins carry, and African operators are now exposed to all three simultaneously.

• Reserve and run risk, even with full backing. The IMF’s recent work on stablecoin stability applies the classic Diamond-Dybvig bank-run model to argue that any privately issued, redeemable instrument is vulnerable to runs once doubt creeps in about reserve quality, and that only central bank reserves truly meet the bar of being run-proof.

  Tether’s case, where it was accused of lending at least $700 million of reserve assets to an affiliated trading platform, Bitfinex, is exactly the kind of yield-chasing behaviour that erodes the backing users assume is sitting untouched.

• Interconnectedness with mainstream rails. This is the part that is genuinely new for Africa. When Paga wires stablecoin settlement into infrastructure already used by 300+ enterprise clients, including Meta and Qatar Airways, or Flutterwave embeds stablecoin balances across its products, processing 400 million transactions a year, events like a depeg, a frozen banking partner, or a bridge exploit no longer affect only crypto-native users.

  It transmits directly into the payment rails that ordinary households and merchants now depend on for salaries, remittances, and everyday settlement. That is a materially different contagion risk than 2022’s crypto-native blowups, which mostly hurt people who had chosen to be exposed to crypto.

• A monetary-sovereignty channel that needs no failure at all. The IMF’s Nigeria report flags a risk that doesn’t require anything to break: the widespread use of dollar-denominated stablecoins resembles a digital form of dollarisation, reducing demand for the naira and weakening the transmission of domestic monetary policy, while also pushing activity that once flowed through banks into less-visible digital wallets and exchanges.

Unrelated to the above, domestic stablecoins inherit local fragility rather than escape it. Nigeria’s cNGN and South Africa’s ZARU were built partly as answers to dollarisation, but critics note that cNGN currently lacks independent reserve audits, and a naira-pegged token is, by definition, only as stable as the naira itself, which has lost roughly 70% of its value since 2020.

The Rationale for Regulation

None of this is an argument against stablecoins, but a rationale for why the regulations and operations must scale with adoption. The core recommendation is proportionality. Registration and licensing should be the baseline for all stablecoins, with higher requirements for governance, resolution planning, and cross-border supervisory cooperation for assets, issuers, and providers that fall into “global stablecoin” territory.

The FSB’s ten principles for stablecoin arrangements follow the same logic: supervisors need real powers and resources, requirements should scale with risk rather than apply uniformly, and arrangements must demonstrate sufficient data and legal clarity before they launch.

The IMF explains why good regulation is genuinely hard rather than merely inconvenient. It requires issuers to back stablecoins with safe assets, which reduces run risk. However, safe assets also get lower yield, which squeezes issuer profitability and can shrink the very supply of stablecoins regulators want to keep useful.

Regulators will have to manage this trade-off depending on the outcomes they want.

For African regulators specifically, the IMF’s framing of Nigeria’s situation is the right way to think about the policy target. Stablecoins are neither a passing trend nor a full substitute for traditional finance; instead, they are a response to real frictions in cross-border payments.

The regulator’s job isn’t to suppress the workaround but to narrow the gap that made the workaround necessary in the first place, while keeping the new risks it introduces contained.

What Can the Ecosystem Do?

A few concrete commitments would move the needle faster than waiting for the next crisis to force them.

• Treat reserve diversification as the standard, before hard lessons are learned. Circle’s response to the SVB episode, spreading reserves across multiple banking partners rather than concentrating exposure, should be the default posture for every issuer and orchestration platform now wiring stablecoins into African payment rails, not a fix applied only after a near-miss.

• Move reserve attestation from monthly to continuous. USDC and Paxos already publish public auditor reports on their reserves. The BIS recommends an “embedded supervision” concept, arguing this process could be automated and made close to real-time using the same distributed ledgers stablecoins already run on, cutting both fraud risk and the compliance burden on operators simultaneously.

• Keep asset segregation non-negotiable. The Tether-Bitfinex lending episode is the cautionary template every issuer operating in Africa should be measured against. Reserve assets backing a stablecoin should never be available to fund the issuer’s own balance sheet or an affiliated entity’s activities.

• Build corridor-level supervisory cooperation while the rails are still being laid. LemFi, Paga, and Flutterwave are each wiring multiple jurisdictions together right now. Memoranda of understanding between regulators, and movement toward the kind of harmonised licensing the EU’s MiCA framework represents, are far cheaper to negotiate before volumes are high than after.

• Hold domestic stablecoins to the same disclosure standard as dollar ones. If cNGN and ZARU are meant to be credible alternatives to USDT and USDC rather than just patriotic branding, they need the audited, transparent reserve backing that dollar stablecoins are increasingly expected to provide.

• Make compliance the moat, not the cost. South Africa’s FSCA licensing regime, covered in Stablecoin Digest 2, already shows this is working. Over 300 approved licenses correlate with 7.8 million users on regulated exchanges, not fewer. Operators that get ahead of licensing and compliance now will be the ones still standing when the next crisis hits and tests everyone’s patience for digital asset products.

What’s Next?

The growth numbers in this edition are genuinely impressive, and the underlying demand, fueled by currency volatility, FX scarcity, and expensive remittances, is not going away.

But every crisis episode unfolds the same way: real utility, real enthusiasm, and capital arriving faster than anyone could verify what was actually backing it.

The difference between Africa’s stablecoin ecosystem maturing into durable infrastructure and becoming the next cautionary case study will be decided less by how fast the funding rounds close and more by whether reserve transparency, supervisory cooperation, and operator discipline can keep pace with the money.

Stay tuned for the next edition of Stablecoin Digest, a Builders in Fintech Column.

Edited by: Kolawole Omobusola

Two editions ago, we talked about how Africans are using stablecoins for several purposes, including remittances, savings, business-to-business (B2B) trade, and corporate treasury. This edition will touch on the companies building the infrastructure that makes it all possible.

Reading the Map

The ecosystem map below reflects the methodology used by a16z to spotlight stablecoin operators across six infrastructure layers: three application layers, a banking layer, a last-mile layer, and a domestic stablecoin layer.

The map makes it clear that African stablecoin operators are not concentrated into a single offering or layer. They appear across the entire stack from licensed exchange infrastructure at the top to USSD-based last-mile settlement at the bottom.

Layer 1 - On/Off-Ramps: Where Fiat Meets the Chain

Every stablecoin transaction in Africa starts and ends with on/off-ramp activity. On/off-ramp providers are the licensed entities that make conversions between local currency and digital dollars possible. As such, they carry the heaviest regulatory burden.

Yellow Card is the most scaled African-founded operator in this layer. Licensed across 20 African countries, it processed $3 billion in annual transaction volume in 2024 (double its 2023 figure), after raising a $33M Series C led by Blockchain Capital.

In January 2026, it shut down its consumer app entirely to focus on B2B stablecoin infrastructure. That pivot was interpreted as a signal that enterprise demand is the market segment with the greatest potential for venture-scale growth.

Chipper Cash, another reputable brand in the ecosystem that has integrated Tether’s USDT settlement and Ripple USD (RLUSD) distribution to its 7 million customers across nine African markets.

South Africa’s VALR, backed by Pantera Capital’s $55M Series B, also listed RLUSD alongside digital asset exchanges like Quidax and Busha in Nigeria, as Ripple formalized its African distribution strategy.

Layer 2 - Orchestration: Moving Money Across Borders

On top of the ramps sits the orchestration layer. This includes companies that route payments across currencies and corridors for businesses, fintechs, and importers. They are the ones with most of the transaction volume, and at the forefront of stablecoin innovation in Africa.

A major player is Juicyway, which processed $1.3 billion in cross-border B2B payments before most people had heard of it. Its model connects liquidity pools for Naira, USD, GBP, and CAD through stablecoin rails, with FX price discovery powered by Naira Rates. It has since been selected by the CBN for an anti-money laundering and counter-financing terrorism (AML/CFT) compliance pilot alongside Flutterwave and Paystack.

Conduit, a US-headquartered, Africa-focused company with operations across Nigeria, Kenya, Ghana, and South Africa, took a different path. Its annualized transaction volume reached $10 billion in 2024, following a $36M Series A led by Dragonfly Capital. Its partnership with Onafriq enabled USDC settlement across 40+ African countries via mobile money rails.

Meanwhile, Flutterwave has embedded stablecoin rails into its existing infrastructure across 34 countries via a Polygon partnership. The African unicorn, alongside Yellow Card and Onafriq, were also the first African members of Circle’s institutional Payment Network.

Layer 3 - Liquidity: Funding the Machine

The a16z analysis identifies thin liquidity between stablecoins and local fiat currencies as the most critical unsolved problem globally. One African-founded company called MANSA is solving this problem from the supply side.

MANSA provides revolving stablecoin credit lines to payment companies by pre-funding settlement obligations, so their customers never experience delays. It raised $10M in February 2025, with Tether leading the equity component.

It underwrites real-time transaction data, not collateral, and has disbursed over $18 million in payments financed to its clients, with access to over $200 million in liquidity through its partner network.

Lemonade Payments, Open FX, and Onafriq are also active players in this layer.

Layer 4 - Last Mile: The Hardest Problem

This is where the stack meets reality. Converting stablecoin value into something a merchant or smallholder farmer can actually spend requires bridging blockchain rails to mobile money networks, USSD systems, and physical agent networks.

KotaniPay provides an API connecting stablecoin rails to M-Pesa, Airtel Money for both online activities and offline USSD transactions for users without internet access. It is registered as a Financial Service Provider in South Africa and received a strategic investment from Tether in 2025.

Paycrest, a Nigerian winner of the Base 2024 Global Onchain Summer Buildathon, takes a decentralised approach, using peer-to-peer (P2P) liquidity matching and smart contracts to convert stablecoins to fiat without a centralised intermediary.

In a different strategy, Accrue is building a physical USD stablecoin agent network in Nigeria, applying the same distribution logic that makes mobile money work.

Layer 5 - Banking: From Observer to Participant

As far as stablecoins are concerned, Africa’s banking sector has moved from observation to active participation in three distinct ways.

ABSA became Ripple’s first African institutional custody client in October 2025, while also providing reserve accounts for stablecoin issuers and launching a gold-backed stablecoin with Ripple.

Standard Bank is the reserve custodian for ZARU (ZAR Universal Network), South Africa’s first institutional-grade stablecoin pegged 1:1 to the South African Rand.

However, M-Pesa’s ADI Chain partnership, targeting stablecoin-to-wallet conversion for 60+ million monthly users across eight markets, is the stack’s biggest short-term test. If it works, every other market gets a template to adopt.

Layer 6 - Domestic Stablecoins: Local Currency on Chain

Nigeria’s cNGN, issued by WrappedCBDC through the Nigeria’s Securities and Exchange Commission (SEC) authorization, has traded volumes over N182.2 billion ($133.2m).

Similarly, South Africa’s ZARU is currently focused only on institutional clients. As a domestic-currency stablecoin pegged to the ZAR, it addresses central banks’ concerns about dollarisation.

The Director General of SEC Nigeria has been explicit in expressing regulators’ expectations for domestic stablecoin issuers. According to him, “The ambition is for a Nigerian stablecoin to power trade from Dakar to Dar es Salaam.”

Whether cNGN integrates with PAPSS (Pan-African Payment and Settlement System) to enable this will be the defining infrastructure question for the future.

The Funding Behind the Stack

Institutional funding for digital asset and stablecoin providers on the continent shows that the most active startups in the ecosystem are well-capitalized. Nigerian Web3 startups raised $43M in 2025, double 2024’s figure, with 89% of that linked to stablecoin-based operators.

What the Stack Tells Us

There are three takeaways here:

1. The stack is global at infrastructure, African at application. Tether, Circle, and Ripple provide the instruments. African founders build the systems that make those instruments useful. That division is workable, but the Onafriq whitepaper warns that Africa must shape the technology, not merely consume it.
   

2. The OTC desk has quietly become structural. The Quidax/TechCabal OTC report documents energy companies and raw materials traders settling multi-million-dollar invoices via stablecoin desks. Global OTC stablecoin volumes grew 147% year-on-year in 2024.
   

3. The last mile is still the bottleneck. KotaniPay, Paycrest, Accrue, and M-Pesa’s ADI Chain integration all address the same problem: how do you deliver stablecoin value to someone with a feature phone and no bank account? The company that solves this at scale will define what mass adoption actually looks like.

What’s Next?

The Nigeria Stablecoin Summit in Lagos in July 2026 will be the first sector-wide policy conversation.

South Africa and Nigeria, both removed from the Financial Action Task Force (FATF) grey list in 2025, have the credibility to lead a continental stablecoin regulatory framework.

Whether they do, or whether 54 separate national frameworks impose 54 separate compliance burdens on the operators mapped above, will determine how much of the value created in this stack stays within Africa.

Stay tuned for the next edition of Stablecoin Digest, a Builders in Fintech Column.

At first glance, Tether’s investment in LemFi looks like another fintech funding announcement with undisclosed terms. But over the past 18 months, a clearer pattern has emerged across African fintech: global stablecoin issuers are increasingly backing remittance platforms, payment networks, and on/off-ramp providers.

Together, these moves point to the same conclusion: the stablecoin sandwich is becoming standard operating procedure for cross-border finance in Africa.

What Is the Stablecoin Sandwich?

In the stablecoin sandwich model, users convert local currency into a stablecoin at the entry point. The stablecoin moves across borders over blockchain rails, bypassing correspondent banks and SWIFT chains, before being converted back into local currency at the destination.

Fiat → Stablecoin → Settlement → Local Currency Payout

The “sandwich” sits in the middle: a blockchain-based dollar that moves in seconds, settles 24/7, and costs significantly less than traditional cross-border rails. The fiat (local currency) layers on both ends are what make the infrastructure invisible to users. Most customers never interact directly with USDT or USDC. They simply send and receive money through familiar apps, bank accounts, and mobile wallets.

Africa has become one of the clearest markets for this model because the structural incentives are strong. Currency devaluation continues to pressure households and businesses across the continent. Kenya’s shilling has depreciated by roughly 50% since 2021, while the naira, cedi, and birr have faced similar volatility. At the same time, traditional cross-border infrastructure remains slow, expensive, and fragmented. The stablecoin sandwich is increasingly emerging as the most practical workaround to those inefficiencies.

The Business Model in Detail

The stablecoin sandwich works because value is created and captured at multiple layers of the transaction stack.

• The Entry Layer: On-ramp providers like KotaniPay, Yellow Card, and Quidax convert local currency into stablecoins for users and businesses. Revenue comes from FX spreads and conversion fees, while the moat is local distribution, regulatory licensing, and integration with domestic payment rails.

• The Settlement Layer: Stablecoin issuers like Tether and Circle sit at the centre of the transaction flow. They earn yield on reserves while expanding distribution every time a new corridor partner joins the network. Tether’s investments in LemFi and KotaniPay are best understood as a distribution strategy, not just financial investment.

• The Orchestration Layer: Platforms like Conduit, Juicyway, and LemFi manage routing, liquidity, compliance, and settlement across corridors. This is where pricing efficiency, liquidity management, and regulatory sophistication become competitive advantages.

• The Exit Layer: Off-ramp providers convert stablecoins back into local currency through bank accounts, mobile wallets, and agent networks. Africa’s mobile money ecosystem already processes over $1.4 trillion annually, making it a natural distribution layer for stablecoin settlement.

The operators building advantages across multiple layers, combining on-ramps with orchestration or settlement with distribution, are likely to define the next phase of African fintech infrastructure.

The Anchor Story: Tether Backs LemFi

Tether has invested in LemFi, with USDT set to power settlement across key remittance corridors spanning Africa, Asia, Europe, and North America. The goal is simple: reduce dependence on traditional payment rails like SWIFT. Founded in 2021, LemFi has raised over $85 million and serves more than one million customers moving money across those corridors.

The strategic logic is straightforward. Tether wants USDT to become the settlement layer for markets where traditional cross-border infrastructure remains slow, expensive, and fragmented. LemFi gives Tether distribution into exactly those corridors through an existing user base already transacting internationally. For users, almost nothing changes. They continue sending and receiving local currencies through LemFi’s interface while stablecoins quietly handle settlement in the background.

This is the stablecoin sandwich in practice: local currency on both ends, stablecoin liquidity in the middle.

The Emerging Pattern

The LemFi deal is the latest signal in a recent trend across African fintech. In less than a year, other key partnerships have reinforced the same conclusion: stablecoin settlement is becoming core financial infrastructure.

Tether and KotaniPay

In October 2025, Tether announced a strategic investment in KotaniPay, an African on-ramp and off-ramp provider connecting stablecoins to local payment channels.

Where LemFi targets diaspora remittances, KotaniPay focuses more directly on fiat conversion within African markets. Together, both investments reveal Tether’s broader strategy: expanding USDT distribution across the continent’s payment infrastructure.

Onafriq and Conduit

In February 2026, stablecoin payments platform Conduit partnered with Onafriq, one of Africa’s largest digital payments networks. Onafriq connects more than one billion mobile wallets and 500 million bank accounts across 40+ African markets. By integrating Conduit’s infrastructure, the network can now offer faster cross-border settlement in corridors where SWIFT transfers still take days.

The partnership initially focuses on treasury operations and liquidity management, but the deeper signal matters more: an incumbent African payments network is integrating stablecoin settlement into its core infrastructure stack. That may be the clearest sign yet that the stablecoin sandwich is becoming table stakes for serious African fintech operators.

Yellow Card, Visa, and Mastercard

Yellow Card has emerged as one of the continent’s most important stablecoin infrastructure providers, operating licensed on/off ramps across more than 20 African markets. In June 2025, Visa partnered with Yellow Card to pilot USDC settlement through Visa Direct. Mastercard later announced its own partnership with Yellow Card to expand stablecoin-enabled payments across Eastern Europe, the Middle East, and Africa.

Visa and Mastercard are dominant incumbents in global payments infrastructure. Their decision to build stablecoin settlement rails alongside African crypto-native operators signals that the sandwich model has moved firmly into the mainstream.

What Comes Next

The stablecoin sandwich is evolving from infrastructure for difficult markets into infrastructure for global payments more broadly. Visa’s senior vice president for CEMEA recently stated that every institution moving money will eventually need a stablecoin strategy. The company already supports more than 130 stablecoin-linked card programmes across 40+ countries and plans to expand to over 100 countries by 2026.

For African fintechs, this moment is significant. The infrastructure they spent years building, on-ramps, off-ramps, liquidity corridors, and mobile money integrations, is now infrastructure global payment networks are actively paying to access.

The bigger question is whether African operators can maintain their advantages as global incumbents scale into their markets, and whether regulatory alignment across the continent allows the stablecoin sandwich to power intra-African trade, not just remittances and imports.

Next Edition

We look at who is building what in Africa’s stablecoin ecosystem, mapping out operators from infrastructure to last-mile service providers on the continent.

Stay tuned for the next edition of Stablecoin Digest, a Builders in Fintech Column.

Gaspard Lezin, founder of crypto startup Suby, said that when he sent $1,000 from New York to Lagos via 8 different rails, the cheapest route cost ₦1,323,000 via traditional payments, while a USDT peer-to-peer transfer cost ₦1,400,000 – a ₦77,000 gap (roughly one month’s groceries). This reality reflects a broader trend in which Africa leads the world in stablecoin adoption.

A survey by BVNK and YouGov found 79% of African respondents hold dollar stablecoins, while 92% of African stablecoin users say their country’s economic situation directly drives their usage.

In our last edition, we explained how regulation is shaping operators’ business models. Besides that, a more interesting development is the specific usage and adoption patterns of stablecoins across the continent.

What are Customers Actually Using Stablecoins For?

Stablecoins cater to different people with their unique needs. Here are some reasons for the coin’s strong demand.

1. Remittance: The Entry Point

Sub-Saharan Africa is one of the world’s most expensive remittance destinations, with an 8.78% average cost for a $200 transfer compared to a global average of 6.49%. Stablecoin rails deliver the same transfers with fees under 1%. Considering that Nigeria alone received approximately $23 billion in remittances in 2025, such a reduction in fees would return hundreds of millions of dollars to families annually.

2. Currency Substitution: The Daily Use Case

In markets where inflation destroys savings and currency fluctuations erode purchasing power, stablecoins act as digital dollars that help protect currency value.

According to a BVNK survey, 95% of Nigerian crypto users prefer to be paid in stablecoins over naira. Also, 59% of them hold Tether’s USDT and 48% hold Circle’s USDC, the highest combined stablecoin ownership of any country in this. Similarly, in South Africa, stablecoins have displaced Bitcoin as the most used digital asset, with volumes growing about 50% monthly since October 2024. This shows that for African users, stablecoins offer a reliable store of value when local currencies fail.

3. B2B Trade & Supplier Payments: The Fastest-Growing Use Case

Businesses are also adopting stablecoins for instant and cheap cross-border transactions. A Quidax/TechCabal report states that energy companies, electronics importers, and raw materials traders are using over-the-counter (OTC) stablecoin desks to settle multi-million-dollar invoices with Asian, European, and Middle Eastern suppliers.

4. Freelancer & Gig Payments: The Growing Middle

The BVNK survey also reported that stablecoins represent an average of 35% of annual income for freelancers and gig workers. The survey further gathered that 3 out of 4 freelancers have increased their ability to do business internationally using stablecoins.

5. Treasury Management: The Corporate Sophistication Signal

African businesses now hold stablecoins as working capital, hedging against local currency depreciation without requiring offshore accounts. They also take advantage of stablecoin yields that their assets can earn on some decentralised finance (DeFi) protocols. A processor with $5M in daily float could earn $250,000 in additional annual revenue by investing in a yield platform with 5% APY (annual percentage yield). That’s extra profit with low risk.

6. Merchant Acceptance: Early but Watching

Many Africans now use stablecoins to pay merchants and online businesses supporting crypto payments for goods and services. Per BVNK, 71% would use a card to spend their stablecoins, but only about 6% of stablecoins globally are used to pay for goods and services.

In Africa, early merchant adoption is concentrated in tourism (Cape Town restaurants, Zanzibar tour operators), while operators like Kredete, Kulipa, and Bitnob have stablecoin-based cards for payments. This means the demand exists, but the infrastructure for smooth merchant acceptance needs to catch up.

What Transaction Types Dominate African Stablecoin Usage?

The transaction-type data from a Chainalysis report shows that Africa’s on-chain stablecoin activity is retail-led, need-driven, and spread across a growing institutional layer.

Notably, USDT commands nearly 80% of the retail stablecoin market in Africa, due to its liquidity depth and availability on TRON (enabling low-cost transfers). Meanwhile, USDC is more preferred among institutionals because of its compliance-sensitive B2B operators and businesses integrating with Circle’s payment network.

Adoption Patterns Across Jurisdictions

Nigeria: Volume and market leadership

Nigeria accounts for 40% of stablecoin inflows into Sub-Saharan Africa and processed over $92.1 billion in total crypto value in the 12 months to June 2025, nearly triple South Africa’s volume. The Investment and Securities Act 2025 classifies digital assets as securities and permits banks to service licensed Virtual Asset Service Providers (VASPs). The CBN’s selection of Flutterwave, Paystack, and Juicyway for an AML/CFT pilot also signals regulatory intent to integrate rather than suppress stablecoin activity.

South Africa: Institutional Maturity

With hundreds of VASPs licensed, Absa Bank in advanced stages of institutional crypto product development, and South Africa’s removal from the FATF grey list in late 2025, the country has built the regulatory certainty that institutional players require. The market is characterised by a high share of large-ticket arbitrage and institutional transfers, rather than retail remittances, a distinct profile from every other African market.

Kenya: The Mobile Money Bridge Test

Kenya’s stablecoin story is inseparable from M-Pesa. Kenya ranks 5th globally for transactional stablecoin use. M-Pesa’s partnership with ADI Chain, targeting 60+ million monthly users across eight African markets, is the most watched near-term infrastructure play on the continent. If it works, it creates the template for seamless stablecoin-to-mobile-money conversion at mass scale.

Ethiopia: The Stress-Test Case

A 30% birr depreciation in 2024 triggered 180% year-on-year (YoY) growth in retail stablecoin transfers, making Ethiopia the fastest-growing retail stablecoin market in Africa and 12th globally on the Chainalysis Adoption Index. No single data point better illustrates the move from local currency shock to immediate stablecoin demand. Zambia follows the same pattern, with 100%+ YoY growth recorded.

What Comes Next for Stablecoin Adoption in Africa?

Mobile Money Integration Will Define Mass Adoption

Africa’s mobile money rails processed over $1.4 trillion in 2025. Connecting that infrastructure to stablecoin settlement at scale would be transformative. M-Pesa’s ADI Chain partnership already puts this to the test. If stablecoin payments can arrive in mobile wallets as local currency, the on/off-ramp bottleneck that limits retail penetration will be resolved.

Credit Is the Second Act

Venture firm a16z predicts credit as the next stablecoin adoption driver after payments. Institutions are already piloting blockchain-based working capital finance for African SMEs. With a mature regulatory framework and high institutional adoption, Africa’s ecosystem could easily build out a regulated institutional credit system.

Institutional Capital Will Follow Infrastructure

Circle, the USDC issuer, listed its Circle Internet Group (CRCL) stock on the New York Stock Exchange in 2025. Visa also has a target milestone of 130+ stablecoin-linked card programmes targeting 100+ countries by the end of 2026. Similarly, Mastercard is partnering with local players like Yellow Card in Nigeria to drive stablecoin adoption in the EEMEA.

These developments show that global institutional capital is following the infrastructure being built in Africa. As more recognition follows and opportunities open, capital will follow to build out the infrastructure and capture value.

The critical bottleneck, which is the on/off-ramp where stablecoins meet local currency for domestic retail transactions, is already being addressed. What happens when that bottleneck is resolved could unleash the next phase of growth in African fintech.

Next Edition

We look at who is building what in Africa’s stablecoin ecosystem, mapping out operators from infrastructure to last-mile service providers on the continent.

Stay tuned for the next edition of Stablecoin Digest, a Builders in Fintech Column.

Globally, stablecoins are of significant interest to regulators because of their potential impact on the financial system. In Africa, they promise faster, cheaper, more inclusive finance, which aligns with development finance policy. However, they also pose financial system risks, such as draining domestic bank deposits, undermining monetary policy, and facilitating capital flight.

But why are stablecoin regulations tricky in Africa? Here are some reasons:

• Many African Currencies Are Unstable: Sub-Saharan Africa is home to some of the world’s most volatile currencies. When Ethiopia’s birr depreciated by approximately 30% in 2024, retail stablecoin transfers surged by 180% year-on-year. When the naira weakened sharply in early 2025, stablecoin transactions reached a monthly on-chain volume of nearly $25 billion in March 2025. These events show that Stablecoin adoption is a viable option for economic self-preservation among Africans.

• Dollarisation Can Be Risky: The IMF has explicitly flagged the risk that dollar-denominated stablecoins (such as Tether’s USDT and Circle’s USDC), by giving consumers and businesses easy access to USD outside the banking system, could accelerate currency substitution and undermine central banks’ monetary tools. In countries already managing naira or cedi volatility, this is another cause for concern.

• Structural Financial Exclusion Can Happen: Roughly 350 million adults in Sub-Saharan Africa remain unbanked. Stablecoins are among the few channels through which unbanked and underserved populations can access dollar-denominated savings and low-cost cross-border transfers without a formal bank account. Regulators who move too aggressively to restrict stablecoins risk foreclosing a genuine pathway to financial inclusion.

• FX Liquidity Crisis: Most African countries have a FX shortage that has been declared a crisis. For businesses that cannot access hard currency through banking channels, stablecoins are becoming an operational necessity.

The result is that African regulators face a particularly unique version of the trade-off. Their options include banning stablecoins to preserve monetary control at the cost of financial innovation and inclusion; competing with stablecoins through CBDCs or local digital currency issuance; or adapting by licensing and managing stablecoins within existing regulatory perimeters. Most African jurisdictions have moved, slowly but visibly, from the first path toward the third.

A Decade of Evolution: African Stablecoin Regulation from 2014 to 2026

Stablecoin/digital asset regulation on the continent has followed a pattern of observe, discourage, permit, and regulate over the last decade. Let’s take a look at the trajectory.

2014–2018: Silence and Observation

When USDT launched in 2014 as the world’s first fiat-backed stablecoin, the dominant posture of African regulators was observation, watching Bitcoin and early crypto markets with suspicion but offering no specific regulatory guidance on stablecoins. A handful of central banks issued informal cautions about the risks of cryptocurrency, but these were not enforceable rules.

2017–2020: First Warnings and Early Restrictions

As crypto markets boomed in 2017, regulators began issuing formal advisories. Nigeria’s Central Bank issued its first directive in January 2017, instructing banks not to hold, trade, or transact in cryptocurrencies. South Africa’s Reserve Bank issued a clarification of a 2017 guidance note, stating that cryptocurrencies were not legal tender but did not explicitly prohibit their use. These were largely advisory positions, not enforcement-backed prohibitions. But they established a tone of caution that shaped the subsequent decade of regulatory development.

2021–2023: Prohibition, the eNaira, and the Limits of Control

This period was defined by prohibition, paradox, and the first structural frameworks. Nigeria’s 2021 crypto ban cut crypto exchanges off from the financial system overnight. This drove adoption underground into peer-to-peer (P2P) channels that regulators could not monitor.

The eNaira, launched in October 2021 as Africa’s first central bank digital currency (CBDC), intended to offer a regulated digital alternative to cryptocurrency, failed to gain traction.

Meanwhile, Mauritius enacted the (VAITOS) Act in February 2022, establishing the continent’s first comprehensive VASP licensing regime, and South Africa’s FSCA classified crypto as financial products under the FAIS Act, making it the first major African economy to move from observation to structured regulation.

In December 2023, Nigeria’s CBN lifted its ban on banks servicing crypto firms, now permitting banks to open accounts for licensed VASPs.

2024: The Binance Affair and Its Regulatory Fallout

This was the year of crisis and clarification. Nigeria’s detention of two Binance executives over alleged exchange rate manipulation sent shockwaves across the continent, with Nigerian stablecoin volumes falling by 38% in the aftermath. Yet the affair paradoxically accelerated the regulatory timeline: confronted with the scale of unregulated stablecoin activity, authorities across the continent moved from suppression to licensing. Nigeria’s SEC launched the Accelerated Regulatory Incubation Program (ARIP), and Kenya issued a Draft National VASP Policy. At this point, the industry began to grasp that compliance was now a competitive necessity.

2025–2026: Formalisation and the Removal from the Grey List

2025 was the most significant period for formal regulatory action in Africa. The headline event was in October 2025, when both South Africa and Nigeria were removed from the FATF grey list, a direct signal to global markets that both countries had made significant progress in anti-money laundering and financial compliance.

In the crypto space, Nigeria’s Investments and Securities Act (ISA) 2025 formally classified digital assets as securities and updated licensing requirements for Virtual Asset Service Providers (VASPs). Kenya also enacted a VASP Act in October 2025, creating a dual-regulator model with the CBK to oversee stablecoins and payments. In Ghana, a VASP Act was passed in December 2025. Meanwhile, Rwanda, Tanzania, Uganda, Seychelles, Zambia, and others are actively exploring regulatory policies and guardrails.

How Regulation Has Shaped Stablecoin Adoption and VASP Business Models

The impact of stablecoin regulations in Africa is seen in the growth of compliance-focused operators, rising adoption, and the creation of distinct windows of opportunity for different business models.

The Chilling and Clarifying Effect

Nigeria’s 2021 crypto banking ban showed that prohibition hinders formal adoption and stimulates informal alternatives. The reversal, starting with the December 2023 lifting of the banking ban and culminating in the ISA 2025, has resulted in the opposite. The crypto industry is now generating millions of dollars in inflows of institutional capital and compliance-oriented operators.

Between late 2023 and Q1 2024, Chainalysis estimates that institutional transactions in the $1-10 million range became the largest driver of crypto activity in Africa, a direct result of regulatory clarity enabling corporate treasury participation.

Compliance is an Advantage

South Africa’s early licensing has already demonstrably shaped its VASP ecosystem. The FSCA’s licensing process approved over 300 CASP licenses out of 512 applications as of December 2025, a 59% approval rate that signals meaningful standards while still enabling market growth with over 7.8 million users on licensed exchanges.

Business Model Evolution

Regulatory clarity has directly enabled new VASP business model categories:

• On/Off-Ramp Specialists. Companies like Quidax and Yellow Card operate across multiple African countries and process stablecoin payments for thousands of businesses. These entities have built their business model around providing licensed, compliant fiat-to-stablecoin conversion in markets with explicit VASP compliance.

• Stablecoin Orchestration Platforms. Lagos-based Juicyway, which processed $1.3 billion in cross-border payment volume through stablecoin rails before publicly launching in December 2024, shows new possibilities for B2B stablecoin orchestration. Its model of connecting liquidity pools for naira, USD, GBP, and CAD through stablecoins requires regulatory clarity on USDT and USDC usage for commercial transactions.

• Domestic Stablecoin Issuers. Nigeria’s approval of cNGN (naira-backed stablecoin) and South Africa’s (rand-backed stablecoin) ZARU represent a new category of regulatory-sanctioned domestic stablecoin issuance. African regulators are not simply trying to contain or accommodate USDT and USDC, but to create competing domestically anchored alternatives.

• B2B Treasury Management and Trade Finance. Regulatory frameworks that permit licensed VASPs to hold and transact in USDT and USDC have enabled African businesses to move treasury management onto stablecoin rails. Companies with supply chain exposure in USD can now hold operational working capital in USDC, reducing their exposure to naira or cedi depreciation without requiring offshore bank accounts. African businesses managing import payments, supplier settlements, and cross-border trade are increasingly using stablecoin rails as a substitute for correspondent banking.

• Stablecoin-to-Mobile Money Bridges. Africa has already proven that people will use digital money at scale, as mobile money processed over $1.4 trillion in transactions in 2025. Kenya’s VASP Act, which explicitly assigns the Central Bank of Kenya oversight of stablecoin-to-payment conversions, is enabling an environment for M-Pesa’s stablecoin-to-M-Pesa integration through its partnership with ADI Chain to target 60+ million monthly users across eight African markets.

• Institutional Custody and DeFi Yield: South Africa’s licensing laws are also enabling a new institutional custody market. The FSCA’s CASP licensing framework is creating the conditions for regulated banks to offer stablecoin custody and yield-bearing stablecoin products to corporate clients.

What Comes Next?

The regulatory landscape across Africa’s major markets has created the necessary conditions for a thriving stablecoin ecosystem. Individuals and business models are now adopting these digital assets at scale. The next step could be the development of corridor-specific VASP licensing across African jurisdictions.

However, the main unanswered question is whether African stablecoin regulation will harmonise at the continental level to eliminate fragmented frameworks. Whether Africa’s major regulators can develop a shared VASP or cross-border licensing framework, such as Europe’s MiCA, will determine how much stablecoins can contribute to the continent’s financial architecture.

Next Edition

We will evaluate adoption and usage patterns for stablecoins across Africa.

Stay tuned for the next edition of Stablecoin Digest, a Builders in Fintech Column.

Stablecoins are quietly becoming Africa’s most important payment rail. Whether you’re invested in fintech news or not, you cannot have missed conversations around stablecoins lately — from Mastercard acquiring BVNK, a stablecoin payment infrastructure provider, for $1.8 billion to AXIAN investing in Hamilton Labs to expand the use of its USDh stablecoin across Africa.

According to a BVNK report, Africa now leads stablecoin ownership globally at 79%. No matter your level of awareness, the adoption of stablecoins in Africa is real. But what exactly are stablecoins, why are Africans adopting them faster than anyone else, and what does it mean for fintech builders on the continent? Let’s unpack it all in this inaugural edition of Stablecoin Digest.

Stablecoins: What Exactly Are They?

A stablecoin is a cryptocurrency designed to have the same value as the physical asset it’s connected to. Now, you probably have heard of Bitcoin and Ethereum. The common thing about these legacy crypto assets is their notorious volatility — their prices can go up and down at any time. For instance, Bitcoin’s price has dropped by 19% in Q1 2026, making digital assets like it poor tools for everyday payments or savings.

That’s the problem stablecoins solve by pegging their values to a stable external asset, usually the US dollar. The idea is that for every existing stablecoin on the blockchain, a corresponding unit is held in a reserve. However, some stablecoins also use algorithms to hold that peg.

The most widely used stablecoins today are Tether (USDT) and USD Coin (USDC), which are fiat-collateralised. This means for every USDT or USDC in circulation, the issuer (Tether or Circle, respectively) holds an equivalent amount in cash and short-term government bonds. If you deposit $1,000, you receive 1,000 digital tokens. You return those tokens, you get your dollars back. The token is burned; the cycle is closed.

There are also crypto-collateralised stablecoins (backed by other digital assets like Ethereum) and algorithmic stablecoins (which use supply-and-demand mechanisms rather than reserves; a model that failed spectacularly with the Terra/LUNA collapse in 2022). In practice, fiat-backed USDT and USDC dominate in Africa.

The Problem Stablecoins Are Solving in Africa

To understand why Africa leads the world in stablecoin adoption, you have to start with the problems that made alternatives necessary in the first place.

Remittances Are Expensive

Africa received approximately $104 billion in remittances in 2024, almost twice the continent’s total overseas development assistance. But Africans incur the highest costs compared to other regions when sending money home. Sub-Saharan Africa averaged 8.37% in remittance fees in 2024, against a global average of around 6%.

The United Nations Sustainable Development Goal (SDG) target is 3%, a threshold the continent is nowhere near reaching. For a family receiving $300 a month from a relative abroad, that fee difference could cover some groceries, medicine, or a ticket to watch your local football team play live.

FX Access is Broken and Costly

Many African countries face FX shortages, local-currency volatility, and weak banking infrastructure, making it difficult for businesses to access foreign currencies, such as the US dollar, required for imports, supplier payments, or cross-border treasury management. This forces African businesses to increasingly adopt defensive treasury strategies because working capital is exposed to currency depreciation. In turn, these businesses suffer a high idle-cash drag, where money that should fuel growth is trapped in precautionary FX buffers.

Cross-Border Payments are Slow and Fragmented.

Only 12% of intra-African transactions are fully processed within the continent; the rest are routed through correspondent banks in the US or Europe. The implications are the additional cost, delay, and opacity faced by every transaction. These are not just inconveniences; they are structural barriers to economic participation.

Cross-border payment friction weakens the bargaining power of African businesses in the global market, as they face worse payment terms, lower priority for import shipments, and smaller order limits due to limited open-account credit available to their sectors. The macro-outcome is that, in the global market, African businesses, especially SMEs, become price takers because of fixed commodity prices and exchange rate factors beyond their control. While stablecoins at least address fragmentation and speed issues, reducing this macro strain, they also enhance competitiveness.

What Stablecoins Actually Do

A stablecoin is, simply put, a dollar that exists on a blockchain. It inherits the dollar’s stability while also offering the blockchain’s benefits, including instant settlement, 24/7 availability, borderless transfers, and smart contract compatibility.

When you send USDT from Lagos to Nairobi, the transaction clears in seconds, at nearly zero cost, without a correspondent bank in New York in the middle. There are no business day limits, no FX desk to negotiate with, and no opaque fee structure. The transaction is recorded on-chain and has irreversible settlement finality without a clearinghouse.

Crucially, stablecoins are also programmable money. They can be embedded in smart contracts that automate payroll, escrow payments, or supplier settlements, thereby unlocking use cases that legacy systems cannot support at comparable costs.

How Africa Is Using Them Right Now

According to Chainalysis, stablecoins make up 43% of all crypto transaction volume in the region. Some ways in which stablecoins are being used include:

• Freelancers and remote workers are receiving payment in USDC or USDT directly into crypto wallets, bypassing costly international wire systems. In Kenya, a Mercy Corps Ventures pilot found that using stablecoins for $5 micropayments from international clients reduced fees from 29% to 2%. Services like Kotani Pay allow users to convert stablecoin receipts directly to M-Pesa in minutes.

• Importers and traders are using stablecoins to pay overseas suppliers, avoiding FX queues and the margins banks charge to access hard currency. A Lagos trader holding working capital in USDT protects his import margins from Naira depreciation.

• Startups and fintechs are settling cross-border transactions through stablecoin rails rather than SWIFT. Infrastructure providers like Yellow Card, CrissCross, VALR, and Busha are building the plumbing (on-ramps, off-ramps, and liquidity networks) that enable this at scale.

• Payments and OTC markets operate across Africa, where peer-to-peer platforms and stablecoin banking and payments providers allow individuals to exchange stablecoins for local currency.

Why Now? What’s Driving the Surge?

Stablecoins are not new; Tether launched in 2014, but adoption in Africa has accelerated sharply in recent years. Several forces explain the timing.

• Mobile penetration has created the distribution infrastructure. Sub-Saharan Africa has over 600 million mobile money accounts, while mobile banking and Fintech apps are part of daily life. Stablecoins plugged into mobile apps for on- and off-ramps feel like a natural extension of the payment behaviour Africans already have.

• Crypto rails have matured. Platforms like Afriex, Luno, Quidax, Yellow Card, and a growing roster of regional fintechs have made it easier to on-ramp from local currency, transact in stablecoins, and off-ramp back to cash.

• Regulatory grey zones have allowed experimentation. Most African jurisdictions neither clearly permitted nor clearly prohibited stablecoin activity until recently, creating space for builders and users to test what works.

💡 KEY INSIGHT

Stablecoins are emerging as Africa’s hidden payment infrastructure. Not a financial experiment or a speculative asset, but the backbone that businesses, freelancers, importers, and diaspora communities rely on to transfer money when the formal system fails them or becomes too costly.

What Comes Next?

Three forces will likely define the next chapter of stablecoin development in Africa:

Regulatory Clarity

Mauritius, South Africa, Nigeria, Kenya, Ghana, and Rwanda have different regulatory frameworks for digital assets. Nigeria’s Investment and Securities Act 2025 clarified registration requirements for virtual asset service providers; recently, even the normally reserved CBN has commenced an AML/CFT/CPF Supervision Pilot for selected providers.

Similarly, Kenya’s Virtual Asset Service Providers (VASP) Act 2025 was enacted in October 2025. As regulatory clarity improves, more institutional capital and formal fintech integration will follow, but it will also limit the informal channels that drove early adoption.

Growth of Local Currency Stablecoins.

Nigeria’s first regulated Naira stablecoin (cNGN) has received a temporary SEC license. This is a case of local-currency stablecoins offering blockchain settlement speeds without the implicit dollarisation that worries regulators. More local-currency stablecoins will come on-chain over the next 12 months.

Institutional Adoption.

South Africa’s regulatory framework has licensed hundreds of providers, and traditional banks like Absa are engaging with digital asset infrastructure. Circle’s partnership with Sasai Fintech to expand USDC distribution through mobile wallets signals that the institutional layer is starting to build on the “shadow” infrastructure that arrived first.

Overall, the current level of stablecoin adoption on the continent is significant and impactful, but it is still in its early stages. The next chapter will see stablecoins embedded seamlessly in trade finance, payroll systems, supply chains, and, eventually, banking settlements through tokenisation.

Now, you get the full picture. Next time you see your favourite tech bro posting what they learned about off-ramp infrastructure on a night out in Nairobi, I hope you will feel equipped to jump into their comments.

Next Edition

We’ll go deeper into the regulatory landscape for stablecoins and digital assets. If you have thoughts, comments, or feedback, reply and let us know.

Stay tuned for the next edition of Stablecoin Digest, a Builders in Fintech Column.