Key takeaways:
Stablecoins have become essential for savings, payments, and trading in Nairobi and Lagos.
High inflation, currency fluctuations, and costly remittances drive their use.
Mobile money integration makes stablecoins accessible and user-friendly.
However, risks concerning reserves, fraud, and evolving regulations persist.
One Tuesday morning in Nairobi, Amina sends an invoice to a client in Berlin. By afternoon, USDC has arrived in her wallet, and within minutes, she converts it to M-Pesa. What once seemed experimental has become standard, thanks to services like Kotani Pay that connect stablecoins with mobile money.
In Lagos, Chinedu operates a small shop and holds his working capital in Tether’s USDt. Using “digital dollars” allows him to restock imports without suffering losses from the naira’s instability.
He is not alone. Between July 2023 and June 2024, Nigeria processed nearly $22 billion in stablecoin transactions — the largest in Sub-Saharan Africa.
The economic advantage is clear. Sending money to the region via traditional channels costs an average of 8.45% (Q3 2024), while digital-first companies have reduced fees to around 4%.
Including a stablecoin transfer and a reliable cash-out method results in significant savings, particularly for transfers between $200 and $1,000 that support families and small businesses.
While market-specific costs can fluctuate, the fundamental principle holds: For millions dealing with inflation, currency controls, and high remittance fees, stablecoins provide a means to maintain value and transfer funds using merely a phone.
The macro squeeze: Inflation, FX and remittance friction
Nigeria continues to face a cost-of-living crisis. Although inflation has decreased from early-2025 highs, it remains severe, with the headline consumer price index (CPI) at 21.88% in July 2025, significantly above the target and consistently diminishing purchasing power.
Recent currency reforms, including devaluations and a shift to a more market-driven FX system, have increased short-term volatility for households and importers who set prices in dollars.
Kenya’s situation is milder but mirrors this trend. Inflation rose to 4.5% in August 2025, driven by food and transportation costs, while fluctuations in the shilling kept demand for USD high among traders.
The region also faces the world’s most expensive remittance corridor. The World Bank’s Remittance Prices Worldwide reveals that Sub-Saharan Africa averaged 8.45% in Q3 2024, far exceeding the UN’s 3% Sustainable Development Goals benchmark and higher than the global average of 6%.
For families sending $200-$500 at a time, these expenses can mean the difference between timely rent payments and falling behind.
These challenges explain why stablecoins have emerged as a viable solution for freelancers, traders, and small businesses from Nairobi to Lagos.
Did you know? Nigeria’s diaspora sent about $19.5 billion home in 2023 — approximately 35% of all remittances to Sub-Saharan Africa.
Why stablecoins? The practical economics
For individuals earning abroad or saving in weak local currencies, stablecoins function as “digital dollars” offering two main benefits: 24/7 transfer availability and often lower fees than traditional money services (especially for cross-border transactions).
This combination of speed and cost-effectiveness accounts for their popularity in emerging markets.
In Sub-Saharan Africa, this trend is already observable. Chainalysis data indicates that stablecoins now represent the largest share of daily crypto activity.
In Nigeria alone, stablecoin transactions under $1 million totaled nearly $3 billion in Q1 2024. Across the region, stablecoins account for approximately 40%-43% of total crypto volume.
Tether’s USDt (USDT) and USDC (USDC) are the leading choices. When cost influences behavior, Tron has emerged as the preferred network for transferring USDT; by mid-2025, it handled the largest share of USDT’s supply. The rationale is straightforward: People opt for the cheapest and most reliable options.
How it works on the ground
On-/off-ramps and P2P
In Kenya and Nigeria, most users acquire USDT or USDC through a combination of regulated fintechs and peer-to-peer (P2P) marketplaces, then cash in or out via banks or mobile money.
Yellow Card, operating in about 20 African countries, conducts most of its transfers in USDT. Its Yellow Pay service connects users across borders and facilitates local cash-outs, including mobile money. Currently, stablecoins constitute 99% of Yellow Card’s operations.
Mobile money bridges
In East Africa, M-Pesa and other mobile wallets serve as the backbone. Kotani Pay offers conversion services that allow partners to settle in stablecoins and pay directly into M-Pesa.
Mercy Corps’ pilot in Kenya employed Kotani for USDC-to-M-Pesa savings. The process is simple: receive in USDC, convert to shillings, and use the same wallet that people are already accustomed to.
Fintech scale-ups
Some companies obscure the crypto element. For instance, Chipper Cash uses USDC behind the scenes for instant dollar transfers across its network. It has also begun leveraging Ripple’s technology to facilitate funds in nine African markets. To customers, it operates like a quicker, cheaper version of a known wallet.
Everyday use cases
Savings: Converting small amounts into digital dollars to guard against inflation.
Payroll and gigs: Freelancers and creators often receive payment in USDC, converting only what they need into the local currency.
Trade and inventory: Small and medium-sized enterprises settle invoices and pay suppliers in stablecoins; Yellow Card notes business payments are among its fastest-growing sectors.
Remittances: Stablecoin transfers with local cash-out alternatives typically outperform traditional remittance services, especially on $200-$1,000 transfers.
Mobile money is already ubiquitous, with over 2 billion registered accounts globally. Sub-Saharan Africa is at the center of this movement.
Regulation and policy drift
Nigeria
The regulatory landscape has undergone a drastic shift in recent years, moving from prohibition to cautious allowance and now stricter regulation.
In December 2023, the Central Bank of Nigeria lifted its banking prohibition and permitted banks to open accounts for virtual-asset service providers (VASPs).
However, in 2024, the situation deteriorated: Authorities intensified their crackdown on naira P2P platforms and Binance, arresting executives, suspending naira trading pairs, and warning of stricter regulations against illicit trading.
Disputes have continued into 2025. Concurrently, Nigeria’s Securities and Exchange Commission revised its crypto framework in January 2025, with the new Investment and Securities Act (ISA 2025) now in effect, clarifying registration obligations for digital-asset companies. More licensing, disclosure, and marketing scrutiny are on the horizon.
Kenya
The Finance Act 2023 introduced a 3% Digital Asset Tax, upheld by the Supreme Court in late 2024.
However, policy shifted again in mid-2025. The Finance Act 2025 repealed the levy, replacing it with a 10% excise duty on fees charged by virtual-asset providers. Both users and operators are now required to navigate excise, VAT/DST, and reporting obligations.
Ultimately, frameworks are rapidly evolving. Always verify the latest local guidelines before choosing a provider.
Did you know? Approximately one in six Kenyan adults has no formal financial account. As of 2021, formal financial inclusion reached 83.7%, indicating that 11.6% of adults remain entirely excluded from both formal and informal financial services.
The risk ledger
While stablecoins may address issues of speed and cost, they introduce their own risks, categorized into three main areas.
Peg and counterparty
Stablecoins’ reliability is contingent on the reserves and governance systems behind them. The Bank for International Settlements and the International Monetary Fund have cautioned that unchecked growth might lead to financial stability crises, from forced sales of reserve assets to “dollarization” undermining local monetary authority.
The USDC de-pegging in March 2023 illustrated how swiftly confidence can falter. Independent assessments have also highlighted transparency concerns and issuer concentration as persistent issues.
Operational
On the ground, common risks include P2P scams, wallet theft, bridge malfunctions, and withdrawal challenges.
Regulatory crackdowns can exacerbate these issues. Nigeria’s enforcement actions in 2024-2025 froze accounts and stranded funds overnight, highlighting how quickly access can vanish.
Policy
At a systemic level, heavy reliance on dollar-linked stablecoins can hasten informal dollarization and shift transactions outside regulated banking frameworks. In response, policymakers are advocating for tighter licensing, stricter reserve standards, and more comprehensive disclosure from issuers.
Did you know? During the 2025 Stablecoin Summit in Lagos, SEC Director-General Emomotimi Agama stated, “Nigeria is open for stablecoin business, but on terms that protect our markets and empower Nigerians.”
What comes next for stablecoins in Africa?
Stablecoins are unlikely to remedy inflation or reform FX policies, but they already streamline saving, payment processing, and cross-border money transfers for many in Nairobi, Lagos, and beyond. Their integration with mobile money is a key element of their practicality.
Entrepreneurs view stablecoins as instruments for practical utility, while regulators express concerns about dollarization and financial stability. The interplay between these forces will dictate future developments.
On the ground, the safest strategy is clear: Maintain low costs, collaborate with reputable providers, and stay vigilant as regulations evolve.
The likely future entails clearer disclosure obligations, stricter licensing requirements, and an increase in “crypto in the background” services, where users do not see the tokens but experience seamless value transfers at reduced costs.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
