Back in 2014, two blockchain pioneers set out to solve a problem confronting 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 known as BitUSD was designed to track the value of the US dollar.
Users could create the token by locking up the network’s native cryptocurrency, BitShares (BTS), as collateral inside a smart contract, with the idea that the system would maintain a dollar-equivalent value through overcollateralisation and market incentives.
For a time, the model appeared to work. BitUSD became the world’s first stablecoin and circulated within a small but growing ecosystem of early cryptocurrency exchanges as a way for traders to move between assets without returning to the banking system.
But because BitUSD was backed by BitShares, sharp swings in the price of the underlying token undermined the mechanism intended to maintain the peg, and by 2018, the system entered forced settlement after becoming under-collateralised.
The peg broke, and the token gradually faded from relevance, joining a growing list of early attempts at digital dollars that proved more fragile than their designers expected. The idea, however, survived the failure. If anything, BitUSD demonstrated that the demand for a digital representation of the dollar inside financial networks was real, even if the first attempts to engineer it were not robust enough to sustain it.
Today, the stablecoin market is booming – especially in Africa.
According to a new report by BVNK, stablecoin supply has increased by more than 500% over the past five years, pushing the total market value above US$300 billion.
The report also found that ownership is more widespread in low and middle-income economies (60%) than in high-income ones (45%), with Africa leading at 79%. Over the past 12 months, the continent has also recorded the fastest growth in stablecoin holdings, driven largely 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 nearly $22 billion in transactions between July 2023 and June 2024.
South Africa, meanwhile, has seen stablecoins displace bitcoin as its most widely used digital asset, with volumes growing by around 50% month-on-month since October 2023.
Much of the uptake stems from long-standing frictions in how money moves across African markets.
In economies where access to hard currency is constrained, stablecoins are being used as an additional channel for holding and transferring dollar-denominated value. They are also reducing the cost and time associated with remittances and cross-border payments, allowing funds to move between individuals and businesses without passing through multiple settlement layers.
For payment companies operating across several 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 appearing in the labour market, where African professionals working for international firms are receiving compensation directly in digital dollars, preserving the value of their earnings in volatile currency environments.
These use cases are also beginning to intersect with existing payment infrastructure across the continent. In East Africa especially, stablecoins are appearing alongside mobile money platforms, as infrastructure providers build on- and off-ramps between digital dollars and local currencies that allow them to move within the same payment workflows used for everyday transactions.
The uptake is also being supported by a regulatory environment that is gradually taking shape across the continent. Mauritius was among the early movers in establishing frameworks for digital asset businesses, while Kenya and Ghana have introduced regulatory regimes for Virtual Asset Service Providers. Uganda and South Africa are moving toward greater supervisory clarity, with regulators in many other markets also engaging directly with industry participants through roundtables and live demonstrations of how these systems operate in practice.
This is not to say there are not legitimate concerns around regulatory reporting, consumer protection, and the potential impact of widespread USD-denominated stablecoins on domestic monetary policy. However, the trajectory suggests that policymakers recognise stablecoins as an enduring feature of the financial landscape. The task now is to craft proportionate frameworks that manage these risks while allowing the technology to develop 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. Integration with wallets, mobile network operators and the emergence of local-currency stablecoins, could deepen domestic use by building on existing payment habits.
At the same time, consumer-facing innovation that removes technical complexity will matter; most users will not need to understand blockchains in order to benefit from them. Deeper integration with banks may prove to be the real inflection point, particularly as custody, liquidity provision and treasury services begin scaling stablecoin applications into areas such as 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.
Adesoji Solanke is the Head of Fintech & Banks Investment Banking Origination at Absa CIB
