Most South Africans consider cryptocurrency as bitcoin, ethereum and other well-known altcoins. But the real action in cryptocurrency in Southern Africa is in stablecoins, which combine the best of traditional and digital finance. These digital assets are typically pegged to fiat currencies such as the dollar or tangible assets such as gold, mimicking conventional money.
The two most widely used stablecoins are USDT and USDC, which have a combined market capitalisation of $200bn and last week reported daily trading volumes of more than $85bn. Both can be purchased/acquired with rand through Luno.
Africans use stablecoins for business payments, to hedge against inflation and the depreciation of local currency, and for retail transfers and remittances. They account for many crypto transactions across the continent. During 2024, stablecoins accounted for more than 40% of all blockchain volume in Africa.
In many emerging-market countries, where the local currency is volatile and access to dollars is limited, dollar-pegged stablecoins have gained traction. These coins offer businesses and individuals a way to store value, facilitate international payments and support cross-border trade. They are also an excellent tool for traders who want to quickly move in and out of positions without converting back to fiat currency, saving both time and transaction fees.
Their rising adoption in Africa can be seen as part of a wider move towards digital financial solutions
The appeal of stablecoins is that they offer the technological advantages of crypto while maintaining the relative stability of traditional currencies.
For South African businesses stablecoins can be a practical solution to currency risk management. They offer a way to hold value in a stable currency without the complexities of maintaining foreign bank accounts or dealing with expensive forex services. Stablecoins help expose African economies to global markets and can be liquidated into fiat currency within a day. Transaction fees are also low, making it more feasible to accept stablecoins from foreign customers as opposed to fiat currency paid through banking rails.
Over the past 12 months we’ve seen significant demand for stablecoins on Luno and view their rising adoption in Africa as part of a wider move towards digital financial solutions.
The stablecoin sector appears poised for continued growth and innovation. Recent developments in the US, including efforts to create a comprehensive regulatory framework for stablecoins, suggest increasing mainstream acceptance.
From a regulatory perspective, stablecoins meet the definition of a financial product under the Financial Sector Regulation Act in South Africa, functioning as digital representations of fiat currency. They are widely used for payments and remittances and are backed by real financial assets in the form of reserves held in banks.
Backed by real-world assets, stablecoins serve a critical function in the crypto industry beyond just price stability. Their role extends to broadening crypto’s utility, driving adoption at scale and enabling deeper integration with traditional financial systems.
* De Wit is South Africa country manager at Luno
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