Sub-Saharan Africa, traditionally a small player in the global cryptocurrency market, is witnessing a slow but steady rise in cryptocurrency adoption. Recent findings from the Chain analysis report reveals that the area represented only 2.3% of global transaction volume between July 2022 and June 2023. Despite the seemingly low figures, the report revealed that cryptocurrencies have been firmly integrated into mainstream markets, becoming an integral part of daily life for many residents.
As part of the region’s journey towards widespread adoption, we recently saw Visa, the world’s largest card network announce a strategic partnership with VALR. South Africa’s largest cryptocurrency exchange by trading volume which has now enabled the exchange to issue payment cards and provide digital payment solutions to its customers across the region and beyond.
To delve into the dynamics of cryptocurrency adoption in South Africa, Chris Maurice, the CEO of Yellow cardparticipated in insightful interviews on CNBC Africa and Business Day TV. Discussions covered the reasons for adopting the area, the impact of regulations and the promising future that awaits.
Chris expressed optimism about the continent’s crypto landscape, stressing that despite its relatively modest share of the global market, South African countries such as Botswana, South Africa, and Namibia have taken proactive measures by announcing licensing regimes for cryptocurrencies. This signals a commitment to foster an enabling environment for the growth of crypto businesses.
In his words, “We have seen a big change in the law in the last 12 months. And so now you have countries like South Africa where there is a licensing regime for crypto, you have Botswana that had the first licensing regime for crypto, you have Nigeria that announced one, the CEMAC region that announced one, Namibia and a number of others Countries.
Additionally, they are exploring CBDCs, exploring Central Bank digital currencies, and actually issuing their own digital currencies, such as in Ghana, Kenya, etc. , and regulation has encouraged the industry to continue to grow“.
A key distinction as noted by Chris is the difference in crypto use cases between Africa and the Western world.
In the US, cryptocurrencies are often bought as speculative assets with the expectation of future growth. Conversely, in South Africa, crypto serves as a practical alternative to traditional banking, facilitating cheaper cross-border payments, remittances and investments as a hedge against inflation and devaluation of local currencies, such as the recent devaluation of the Malawi Kwacha by 44% against the dollar.
The trend is becoming increasingly evident as fintech companies across the region leverage stablecoins for international payments. Maurice predicts that this positive development will continue over the next 5 to 10 years, reshaping the entire landscape of the banking system and even pushing governments across Africa to embrace cryptocurrencies as a legal means of payment.
As South Africa takes a pioneering stance in developing regulatory frameworks and promoting crypto-friendly environments, the continent looks poised for a transformative journey towards widespread cryptocurrency adoption. The intersection of technological innovation, regulatory support and a unique set of use cases positions South Africa as an emerging hub for cryptocurrency enthusiasts and businesses alike.
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