What Are Africa’s Stablecoin Users Trying to Tell Its Central Banks?
Ethel Cofie
Africa is moving from debating whether crypto should be regulated to deciding how it should be regulated.
That is broadly the right direction.
Ghana is bringing virtual assets formally inside the regulatory perimeter. South Africa is incorporating crypto assets into its broader capital-flow architecture. Nigeria has moved through restriction, enforcement and towards a more formal regulatory framework.
The reasons are obvious. Consumer losses matter. Money laundering matters. Tax matters. Capital flows matter. Financial stability matters.
But I think there is another question hiding underneath the regulatory conversation.
Millions of Africans are choosing stablecoins despite uncertain protection, fraud risk and regulatory ambiguity. What exactly are they trying to buy?
Because what if part of Africa’s stablecoin boom is not really demand for crypto at all?
What If They Don’t Particularly Want Crypto?
Nigeria gives us an interesting clue.
IMF analysis estimates that stablecoins accounted for more than 65% of Nigerian crypto inflows in 2024, dominated by dollar-denominated USDT and USDC.
That distinction matters.
Someone buying Bitcoin because they believe its price will rise is doing something very different from an SME acquiring USDT because it needs to pay a supplier.
Someone holding USDT because they are worried about the future value of their domestic currency is doing something different again.
Yet all three appear in our statistics as crypto users.
Imagine a Ghanaian business owner who needs to pay an overseas supplier. Her bank can make the payment. But perhaps accessing FX is difficult. Perhaps the process takes too long. Perhaps the charges matter. Perhaps the supplier simply wants dollars.
She discovers she can acquire USDT and send it.
What exactly has she adopted? Blockchain? Cryptocurrency? Decentralised finance? Perhaps.
But maybe what she really found was something considerably less revolutionary: a dollar that moves more easily.
That should interest central banks.
Stablecoin Adoption May Be Telling Us Where the Financial System Hurts
When customers abandon one product for another, good companies don’t only ask how to stop them leaving. They ask why they left.
Financial policymakers should perhaps occasionally do the same.
If stablecoin usage increases when FX becomes difficult to obtain, that is information. If SMEs use stablecoins for supplier payments, that is information about cross-border banking. If diaspora communities prefer them for remittances, that tells us something about the remittance market.
If people acquire USDT primarily to hold rather than spend, that may tell us more about confidence in domestic currencies than enthusiasm for blockchain. And if users immediately move to peer-to-peer channels when regulation closes a formal route, that tells us something about regulatory friction.
None of this means the activity should remain unregulated.
Financial behaviour is data.
We should stop treating adoption only as something to regulate and start treating some of it as something to learn from.
The Uncomfortable Part Is the Dollar
There is another reason stablecoins deserve a different conversation from crypto generally.
The dominant stablecoins aren’t denominated in cedis. Or naira. Or kwacha. Or shillings.
They are dollars.
So when an African moves savings from domestic currency into USDT, two things happen simultaneously. They adopt a new technology. But they also choose another currency.
Those are very different policy signals.
Perhaps we should therefore be careful about describing all of this simply as African crypto adoption. Some of what we may actually be observing is technologically enabled dollarisation.
How much African stablecoin adoption would survive if domestic currencies were consistently stable, FX readily available and cross-border payments cheap, simple and instant?
I don’t know the answer. But African central banks should probably want to.
Regulation Can Move the Activity Without Solving the Demand
Regulation is necessary. But regulation changes the product.
KYC. Source-of-funds requirements. Transaction monitoring. Tax reporting. Capital-flow compliance. Licensed intermediaries. Potential transaction limits.
Each may be completely justified.
Ghana provides a useful current example of why this matters. As the country moves from legislation into implementation under the Virtual Asset Service Providers Act, 2025 (Act 1154), alongside dedicated regulatory capacity at the Bank of Ghana and the SEC’s regulatory sandbox, the challenge is not simply to bring activity inside a licensed perimeter. It is also to understand what happens to demand as the rules begin to bite.
The Ghana example is particularly timely, but the question is Pan-African. Nigeria, South Africa, Kenya, Zambia and other markets will face different patterns of stablecoin demand because their currencies, FX markets, capital controls, remittance flows and financial systems are different.
Similar stablecoin transactions can therefore be symptoms of very different financial-system conditions.
The important question is what happens when the regulated route becomes sufficiently difficult that the user goes somewhere else.
Nigeria provides an important warning. Restrictions on formal crypto channels did not simply eliminate the underlying activity. Some users migrated towards peer-to-peer and less-regulated channels.
So regulators aren’t always choosing between regulated crypto and no crypto. Sometimes the real choice is between visible activity inside the regulatory perimeter and less-visible activity outside it.
A regulator can successfully regulate an activity out of the institutions it supervises without successfully regulating the activity itself. Regulatory visibility can fall faster than economic demand.
African Regulators Should Ask Three Questions
The Risk Test
What harm are we trying to prevent?
Consumer harm? Money laundering? Capital flight? Tax leakage? Currency substitution?
The Substitution Test
If this route becomes unavailable or unattractive, where does the activity go?
Back to a bank? To a licensed VASP? Offshore? P2P? Cash? Or does it actually stop?
The Revelation Test
What is this behaviour telling us about the financial system people already have?
If businesses are using stablecoins because conventional cross-border payments don’t work well enough, that’s a payments signal. If citizens primarily hold dollar stablecoins as savings, that’s a currency signal. If users choose stablecoins because formal FX access is difficult, that’s an FX-market signal. If customers migrate to P2P when regulation makes formal channels cumbersome, that’s a regulatory-design signal.
Good regulation should understand all three.
Because regulating the risk is not necessarily the same thing as solving the reason the activity exists.
Together, the Risk Test, the Substitution Test and the Revelation Test form the basis of what I call the Virtual Asset Substitution Impact Assessment (VASIA), an EDEL methodology for distinguishing between three very different outcomes: activity eliminated, activity formalised inside safer regulated channels, and activity displaced elsewhere.
Without measuring substitution, regulators can mistake a cleaner regulated perimeter for a changed market. Without measuring revelation, they can regulate the instrument without understanding why citizens and businesses wanted it.
And Banks Should Be Listening Too
This is not only a central-bank problem.
If an SME finds it easier to use a stablecoin for an international supplier payment than its bank, the bank should want to know why. If diaspora customers prefer a new digital route to the bank’s remittance product, that is product information.
If customers are willing to accept unfamiliar technology, weaker consumer protection and new forms of fraud because another financial product solves their problem better, that should make somebody inside the incumbent institution uncomfortable.
The traditional financial sector cannot simply say: Stablecoins are risky.
They are.
It also has to ask: Why are some of our customers willing to accept those risks?
Stablecoin adoption should therefore appear not only on innovation dashboards, but on strategy, treasury, risk and board agendas.
The institutional question is not simply how much crypto activity exists. It is what conventional financial activity is being substituted, at what rate, and why.
Africa Should Regulate the Risk. And Measure Where the Money Goes.
African regulators are right to bring virtual assets inside the regulatory perimeter.
But millions of Africans have already made financial choices with their money. Those choices create risks. They also contain information.
Some of the demand may ultimately be served by regulated virtual-asset providers. Some should be met by banks and payment companies. Some requires better cross-border financial infrastructure. Some requires deeper FX markets. And some belongs to monetary and macroeconomic policy rather than technology regulation at all.
The challenge is knowing which is which.
So as African countries build their virtual-asset regimes, I would add one question to the regulatory agenda:
Africa’s objective should not be to produce beautifully regulated virtual-asset markets while losing sight of the financial behaviour taking place outside them.
The success of regulation must therefore be measured not only by what becomes compliant inside the perimeter, but by what happens to the underlying economic behaviour.
Regulate the risk. Formalise what should be formalised. Stop what should be stopped. But measure where the money goes.
About the Author
Ethel Cofie is Founder & CEO of EDEL Technology Consulting and a technology governance and digital-finance advisor. She serves on boards and institutional advisory structures across Africa, with work spanning financial services, digital transformation, technology risk and emerging financial infrastructure.
She developed the Virtual Asset Substitution Impact Assessment (VASIA), an EDEL methodology for examining whether virtual-asset regulation eliminates financial activity, moves it into regulated channels or displaces it into alternative channels.
The institutional VASIA framework is available through EDEL Technology Consulting: www.ethelcofie.com/virtual-assets-workbook.html