Key insights:
Stablecoins have become essential for savings, payments, and trading in Nairobi and Lagos.
Adoption is fueled by inflation, currency fluctuations, and costly remittance fees.
Mobile money integrations make stablecoins accessible and user-friendly.
Concerns persist regarding reserves, fraud, and evolving regulations.
On a Tuesday morning in Nairobi, Amina sends an invoice to a client in Berlin. By afternoon, USDC appears in her wallet, and shortly after, she converts it to M-Pesa. What used to feel experimental is now commonplace, largely due to services like Kotani Pay that link stablecoins with mobile money.
Meanwhile, in Lagos, Chinedu, who owns a small shop, keeps his operating funds in Tether’s USDt, allowing him to replenish stock without fearing the naira’s instability.
He’s far from alone. Between July 2023 and June 2024, Nigeria processed nearly $22 billion in stablecoin transactions — the highest in Sub-Saharan Africa.
The motivation is economic. Sending money to the region through traditional channels incurs an average cost of 8.45% (Q3 2024), while digital-first services have reduced fees to around 4%.
By adding a stablecoin transaction and a dependable cash-out option, the savings become more pronounced, especially on transfers ranging from $200 to $1,000 that are vital for families and small enterprises.
Costs differ by market, but the core idea is clear: For millions facing inflation, currency controls, and expensive remittance options, stablecoins provide a way to preserve value and transfer funds using just a phone.
The macro squeeze: Inflation, FX and remittance friction
Nigeria’s cost-of-living crisis persists. While inflation has decreased from early 2025 peaks, it remains high, with the consumer price index (CPI) at 21.88% in July 2025, far exceeding targets and diminishing purchasing power.
Currency reforms implemented since 2023, including multiple devaluations and a transition to a market-driven FX regime, have intensified short-term volatility for households and importers relying on dollar pricing for essentials.
Kenya’s situation is less severe but similar. Inflation rose to 4.5% in August 2025, spurred by increasing food and transport costs, while fluctuations in the shilling drove high USD demand among traders.
Additionally, the remittance corridor in the world is one of the priciest. The World Bank’s Remittance Prices Worldwide reports Sub-Saharan Africa’s average costs were 8.45% in Q3 2024, significantly above the UN’s 3% Sustainable Development Goals target and the global average of 6%.
For families remitting $200-$500, those fees can mean the difference between timely rent payments and falling behind.
These challenges illustrate why stablecoins are pragmatic solutions for freelancers, traders, and small businesses stretching from Nairobi to Lagos.
Did you know? Nigeria’s diaspora sent approximately $19.5 billion home in 2023, amounting to around 35% of all remittances to Sub-Saharan Africa.
Why stablecoins? The practical economics
For individuals earning across borders or saving in weak local currencies, stablecoins serve as “digital dollars” with 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 explains their popularity in emerging markets.
In Sub-Saharan Africa, this trend is already evident. Chainalysis data indicates stablecoins now form the largest segment of everyday crypto activity.
In Nigeria, transactions below $1 million are predominantly conducted using stablecoins, totaling nearly $3 billion in Q1 2024. Across the region, stablecoins account for approximately 40%-43% of the total crypto volume.
Tether’s USDt (USDT) and USDC (USDC) lead the market. Where cost dictates behavior, Tron has emerged as a favored network for transferring USDT; by mid-2025, it held the majority share of USDT’s supply. The reasoning is straightforward: individuals gravitate towards the most economical and trustworthy options.
Operational mechanisms
On-/off-ramps and P2P
In Kenya and Nigeria, users typically acquire USDT or USDC via a combination of regulated fintech companies and peer-to-peer (P2P) trading platforms, cashed in or out through banks or mobile money services.
Yellow Card, active in around 20 African nations, conducts most of its transfers in USDT. The Yellow Pay service connects users across borders and accommodates local cash-outs, including via mobile money. Currently, stablecoins constitute 99% of Yellow Card’s operations.
Mobile money integration
In East Africa, M-Pesa and other mobile wallets form the backbone. Kotani Pay offers conversion services that enable partners to settle in stablecoins and make direct payments into M-Pesa.
Mercy Corps’ pilot program in Kenya utilized Kotani to test USDC-to-M-Pesa savings. The transaction flow is seamless: receive in USDC, convert to shillings, and spend with the same wallet users already utilize.
Fintech innovations
Some companies make the crypto aspect seamless. For instance, Chipper Cash employs USDC behind the scenes to facilitate instant dollar movements across its network. It has also begun using Ripple’s technology to channel funds into nine African markets. For users, it feels like a quicker, cheaper version of a familiar wallet.
Use cases
Savings: Converting small amounts into digital dollars to safeguard against inflation.
Payroll and gigs: Freelancers and creators are often compensated in USDC, exchanging only what they require into local currency.
Trade and inventory: Small and medium-sized enterprises process invoices and pay suppliers in stablecoins; Yellow Card reports business payments among its fastest-growing segments.
Remittances: Stablecoin transactions with local cash-out options frequently outperform traditional remittance services, particularly for transfers from $200 to $1,000.
Mobile money is already ubiquitous, with over 2 billion registered accounts worldwide. Sub-Saharan Africa is at the forefront of this trend.
Regulatory landscape
Nigeria
The regulatory environment has shifted dramatically in recent years, evolving from prohibition to cautious acceptance, and now toward more stringent regulation.
In December 2023, the Central Bank of Nigeria lifted its banking ban, permitting banks to establish accounts for virtual-asset service providers (VASPs).
However, in 2024, the situation reversed: Authorities intensified constraints on naira P2P platforms and Binance, detaining executives, canceling naira trading pairs, and warning of forthcoming regulations against illicit trading.
Disputes have continued into 2025. Concurrently, Nigeria’s Securities and Exchange Commission revised its crypto regulatory framework in January 2025, and the new Investment and Securities Act (ISA 2025) clarified registration obligations for digital-asset firms. Anticipate increased licensing, disclosure, and marketing scrutiny.
Kenya
The Finance Act 2023 introduced a 3% Digital Asset Tax, upheld by the Supreme Court in late 2024.
However, policy changed again in mid-2025. The Finance Act 2025 revoked the tax and substituted it with a 10% excise duty on fees charged by virtual-asset platforms. Users and operators are now required to track excise, VAT/DST, and reporting duties.
Ultimately, regulatory frameworks are developing rapidly. Always consult the most recent local guidance before selecting a provider.
Did you know? Approximately one in six Kenyan adults lacks any formal financial account. As of 2021, formal financial inclusion reached 83.7%, indicating that 11.6% of adults remain entirely outside both formal and informal financial services.
Risk considerations
While stablecoins address speed and cost issues, they harbor their own risks, categorized into three primary areas.
Peg and counterparty
Stablecoins rely on the reserves and governance behind them for reliability. Analyses from the Bank for International Settlements and the International Monetary Fund caution that rapid growth could instigate issues regarding financial stability, ranging from forced asset sales to “dollarization” impacting local monetary control.
The USDC de-peg in March 2023 demonstrated how swiftly confidence disruptions can spread. Independent evaluations have also highlighted transparency deficiencies and issuer concentration as persistent concerns.
Operational
Day-to-day risks include P2P fraud, wallet thefts, bridge failures, and challenges with cashing out.
Regulatory actions can exacerbate these issues. Nigeria’s crackdown in 2024-2025 resulted in account freezes and stranded funds overnight, illustrating how suddenly access can vanish.
Policy
At a systemic level, heavy dependence on dollar-linked stablecoins may prompt informal dollarization and shift transactions outside of regulated banking systems. Consequently, policymakers are advocating for stricter licensing, enhanced reserve criteria, and increased issuer transparency.
Did you know? At the 2025 Stablecoin Summit in Lagos, SEC Director-General Emomotimi Agama stated, “Nigeria is open for stablecoin business, but under conditions that safeguard our markets and empower Nigerians.”
Future of stablecoins in Africa
Stablecoins may not eliminate inflation or reform FX policies, but they are already enhancing the affordability and speed of saving, earning, and transferring money across borders for many in Nairobi, Lagos, and beyond. Their integration with mobile money renders them practical.
Developers position stablecoins as tools for daily utility, while regulators are concerned about dollarization and financial stability. The interplay between these dynamics will dictate future developments.
For users, the most prudent strategy is simple: minimize costs, choose reliable providers, and remain vigilant as regulations evolve.
Anticipate forthcoming requirements for clearer disclosures, stricter licensing, and the rise of “crypto in the background” services, where users perceive only the value transferring swiftly and cost-effectively.
This article does not provide investment advice or recommendations. Every investment and trading decision carries risks, and readers should perform their own research when making such decisions.
