By Adesoji Solanke, Head of Fintech and Bank Investment Banking Origination, ABSA CIB
In 2014, two blockchain pioneers worked to solve a problem facing the early cryptocurrency ecosystem: the extreme price volatility of Bitcoin and the first generation of altcoins made them difficult to use for everyday transactions and impractical as a reliable medium of exchange. Their answer came from an experimental blockchain platform called BitShares, where a token called BitUSD was designed to track the value of the US dollar.
Users can create tokens by locking the network's native cryptocurrency, BitShares (BTS), as collateral inside a smart contract, with the idea that the system will maintain dollar equivalent value through overcollateralization and market incentives. For a while, the model appeared to work. BitUSD became the world's first stable coin and circulated within a small but growing ecosystem of early cryptocurrency exchanges as a way for traders to move between assets without having to return to the banking system.
But because BitUSD was backed by BitShares, sharp fluctuations in the price of the underlying token weakened the mechanisms intended to maintain the peg, and by 2018 the system entered forced settlement after becoming under-collateralized. The peg broke and the token gradually faded from relevance, joining the growing list of early attempts at digital dollars that proved more fragile than their designers intended. However, the idea met with failure. If anything, BitUSD demonstrated that the demand for a digital representation of the dollar inside financial networks was real, even if earlier attempts to engineer it were not strong enough to sustain it.
Today, the stablecoin market is booming – especially in Africa.
According to a new report from bvnkThe stablecoin supply has increased by more than 500% over the past five years, bringing the total market cap to above US$300 billion. The report also found that ownership is more widespread in low- and middle-income economies (60%) than in high-income (45%), with Africa leading with 79%. Over the past 12 months, the continent has recorded the fastest growth in stablecoin holdings, largely driven by activity in Nigeria and South Africa.
data from yellow card Points to the same trend across the continent. Stablecoins accounted for 43% of total cryptocurrency transaction volume in sub-Saharan Africa in 2024. Nigeria emerged as the largest market, recording transactions worth about $22 billion between July 2023 and June 2024. Meanwhile, South Africa has seen stablecoins displace Bitcoin as its most widely used digital asset, with volumes increasing by almost 50% month-on-month since October 2023.
Much of the rise has been driven by a long-running dispute over money flows in African markets.
In economies where access to hard currency is restricted, stable coins are being used as an additional channel to hold and transfer dollar-denominated value. They are also reducing the costs and time associated with remittances and cross-border payments, allowing money to move between individuals and businesses without having to go through multiple settlement layers. For payments companies operating in multiple jurisdictions, they are being used as a treasury tool to move liquidity between markets without tying up working capital in prefunded accounts.
They are also visible in the labor market, where African professionals working for international firms are receiving compensation directly in digital dollars, preserving the value of their earnings in a volatile currency environment.
These use cases are also beginning to integrate with existing payments infrastructure across the continent. Particularly in East Africa, stable coins are appearing alongside mobile money platforms, as infrastructure providers build on- and off-ramps between digital dollars and local currencies that allow them to be transferred within the same payment workflows used for everyday transactions.
The initiative is also being supported by a regulatory environment that is gradually taking shape across the continent. Mauritius was one of the early promoters to establish a framework for digital asset businesses, while Kenya and Ghana have introduced regulatory regimes for virtual asset service providers. As Uganda and South Africa move towards greater supervisory clarity, regulators in many other markets are also engaging directly with industry participants through roundtable meetings and live demonstrations of how these systems work in practice.
This does not mean that there are not legitimate concerns about the potential impact of broader USD-denominated stablecoins on regulatory reporting, consumer protection, and domestic monetary policy. However, the trajectory suggests that policymakers recognize stablecoins as a permanent feature of the financial landscape. The task now is to create a proportionate framework that manages these risks while allowing the technology to flourish within the continent's financial system.
In the near term, several developments are likely to determine the next phase of stablecoin adoption across the continent. Wallets, integration with mobile network operators and the emergence of local-currency stablecoins could deepen household use, building on existing payment habits. Also, consumer-facing innovation that removes technical complexity will matter; Most users will not need to understand blockchains to benefit from them. Deeper integration with banks could prove to be the real inflection point, especially as stablecoin applications begin to scale in areas such as custody, liquidity provision and treasury services trade finance and supply-chain payments. Whether the ecosystem matures into a cohesive network will also depend on interoperability between fintechs, banks and infrastructure providers, rather than the development of fragmented systems.
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