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For Western markets, using cryptocurrencies often gets buried in speculative talk or far-off conversation about the reinvention of the financial system.
Across many countries in sub-Sahara Africa, it is a reality: citizens saving and spending in stablecoins, daily.
Nigeria ranks second in crypto adoption around the world and is among the first countries in the world to have launched a Central Bank Digital Currency (CBDC), while the South African government, in its 2024 Budget, emphasized its focus on digital payments and tokenization (PDF).
The region has a larger share of smaller transactions than most other parts of the world, reflecting its use by individuals rather than institutions.
Cryptocurrencies, and stablecoins in particular, can provide the payment rails needed to meet the region’s goals for financial inclusion, cross-border remittances, informal trade, and community digitalization.
While Africa has historically lagged behind in some technology advancements, this has enabled it to leapfrog to newer technologies — such as when it bypassed fixed-line telecom to rapidly adopt mobile phones.
Broader adoption of cryptocurrency might be another example — leapfrogging traditional payment systems for people, many of whom have no access to bank accounts, and heading straight into the crypto realm.
Techopedia sat down with Christopher Maurice, co-founder and chief executive officer (CEO) of centralized African crypto exchange Yellow Card, to discuss how the African continent is leading the way and what other regions and countries can learn from its approach.
About Christopher Maurice
Christopher Maurice started Yellow Card in 2016 from his dorm room in Auburn, Alabama, before moving the company to Lagos, Nigeria, and launching the mobile app in 2019. Today, Yellow Card is the largest crypto company on the African continent, as well as the first and only licensed pan-African exchange.
Yellow Card has facilitated over $2 billion in transactions and launched full on-and-off ramps for local fiat currencies in 20 African markets. Chris has led the company through three successful funding rounds, securing over $50 million — the most ever raised by a crypto company on the African continent — from investors including Polychain Capital, Valar Ventures, Third Prime Ventures Block’s Cash App, Coinbase, and more.
Chris graduated from Auburn University with a degree in Finance in 2019. Chris was featured on the Forbes 30 Under 30 List (2023) in the “Finance” and “Big Money Startups” categories.
Key Takeaways
- Stablecoins dominate in the region as users prioritize access to US dollars over speculative investing.
- Africa is leapfrogging other regions in adopting digital payments.
- There is an opportunity for low-cost blockchains to gain traction as Ethereum fees are too high for African users, and fees for transferring USDT on Tron are rising.
- The killer app for crypto in the region is cross-border payments between countries where people frequently move around, but banking systems are not interconnected.
- Everyone in the industry has a role to play in bringing legitimacy to crypto and educating regulators.
Key Drivers for Africa’s Cryptocurrency Usage
Q: Why is crypto gaining traction in Africa, and what are the main use cases?
A: Crypto is a very broad term. We can narrow it down a lot more specifically to stablecoins that have really garnered broad traction across the African continent. I don’t think that there are legions of people out there trading DOGE in rural parts of the continent versus moving stablecoins such as USDT, USDC, and PYUSD around.
If you look at why stablecoins have become so prolific across Africa, it’s because they solve the problems that most countries on the continent have, which is businesses that operate in most parts of the continent have a very hard time accessing dollars.
Those problems include being able to save their money against inflation, being able to make international payments, or simply being able to get access to hard currency.
Stablecoins make it very easy for these companies to be able to manage their treasury and hedge some of the local risk in the countries they operate in.
Q: How do you see the relationship between stablecoins and CBDCs?
A: I don’t necessarily see stablecoins as related in any way to CBDCs. Stablecoins are the closest thing that the US has to a CBDC.
USDC, USDT, and PYUSD are the closest thing that the Fed has to a CBDC — but they’re all private sector, so it’s not the Fed issuing any of these tokens, it’s three private companies.
But with a CBDC, you don’t remove the core problems that stablecoins are solving. With a CBDC, it might make it easier for me to be able to make payments locally if I’m in any particular country, but it doesn’t change the fact that for businesses, it remains very hard to facilitate imports.
It’s very hard for them to hedge against inflation and it’s very hard for them to be able to access hard currencies they need to manage their treasury and keep their operations going.
And so CBDCs and stablecoins will work very well together, and CBDCs will make it easier for people to be able to access international markets using any particular currency, but there’s still quite a bit that stablecoins do that CBDCs at least — as of today — have not necessarily solved.
Q: Nigeria has launched the e-naira, but are any of the other countries advanced in terms of launching a CBDC?
A: Ghana is probably one of the closest outside of Nigeria. The Bank of Ghana has done a great job in the way that they’ve been scoping it out. It’s been a long time coming, and a lot of really smart people have put in a lot of effort and a lot of work.
As with anything, it comes down to execution. Hopefully, it’ll be live soon and people can start utilizing it. But if the Bank of Ghana can really knock this out of the park, it’ll be great for the country as a whole.
With a little bit of luck, it’ll do wonders for the economy there, which has had issues recently.
Yellow Card and Africa
Q: How does Yellow Card’s application programming interface (API) work, and what type of businesses in Africa are using it?
A: The payments API essentially abstracts our rails across the 20 countries in Africa that we’re operating in and makes it available for businesses, who can then offer it to their customers.
We work with a number of big companies, Coinbase and Block being the two that are public — and they’re utilizing this API to be able to enter the African continent, make payments, collect payments, and be able to serve African customers.
For any company that wants to enter the continent, it makes it extremely easy, and for any company within the continent, it makes it easy to hedge as well as access hard currencies and stablecoins.
Q: Which cryptocurrencies do you see being popular in Africa?
A: On the continent the cryptos that we see being popular are USDT, PYUSD, USDC — it’s the stablecoins. Outside of that, Bitcoin is setting new all-time highs, and when that happens, there is obviously more interest.
People get hyped when Bitcoin is going up and “a rising tide lifts all ships” — so you have a lot of other tokens that are growing and becoming more popular.
But in terms of what’s popular and what’s consistent, it’s stablecoins. Stablecoins just solve such a clear and obvious problem for businesses and people across the continent. That’s why you’ve seen so much demand and such a growing use case for them.
Over 95% of what we do is fiat to stablecoins and stablecoins to fiat — effectively on- and off-ramping.
We do offer a couple of others — Bitcoin, Ethereum, and some of the top market-cap coins.
But until Ethereum costs less than $200 to make a transaction, I don’t think it’s going to get much traction on the continent.
The Importance of Addressing High On-chain Fees
Q: Is Solana a potential solution to high fees?
A: There have been a number of Layer 1 projects that have come out and deemed themselves ‘the Ethereum killer’.
Ethereum has a lot more staying power than people realize. It’s one of the better Layer 1 smart contract chains available for a number of reasons — It’s certainly a lot more decentralized than some of these other ones.
But that being said, it comes to the fact that people don’t actually care [to use it], because it costs $50 to make a transaction right now.
Insofar as Ethereum fees cannot get tamed and the community is not able to make changes that are going to bring those gas fees down, I think that you have a massive opportunity for Solana and some of these other tokens and chains to be able to provide services to the rest of the world.
Ethereum is great for the couple of people in San Francisco who can pay $50 or $200 to make a transaction and want to play around in DeFi [Decentralized Finance] and all of that, but for the rest of us who just want to be able to make transactions, there’s no interest. If I want to pay $50 to make a transaction, I’ll go to my bank.
There’s a lot of opportunity for chains like Solana, Stellar, Celo, and a number of these other chains that provide that low-cost alternative.
I am cognizant that Solana has like 15x during this bull run but regardless, what I am very cognizant about as well is that people still want stablecoins. People are not going to switch and put all of their money in Solana because the chain is lower cost. They want USDT, they want USDC, they want PYUSD.
What’s really going to be key and what’s going to be very interesting when we think about these different chains is — especially right now with Tron making the changes to the way that they calculate fees.
Tron fees have risen exponentially for users of USDT on Tron— I think it’s going to be very interesting to see how USDT, USDC, PYUSD, and so forth respond to being able to provide as much liquidity as possible on actual low-cost chains.
Tron is no longer a low-cost chain for stablecoins. So for Solana, Stellar, Celo, and for Polygon, it’s a massive opportunity to step up and get liquidity for USDT and other stablecoins on these chains — and the ability of these stablecoins to do that is going to be critical.
Q: Has Tron been as popular in Africa as in other regions?
A: The single most popular token is USDT on Tron. It’s a little-known fact that there is actually more liquidity for USDT on Tron than there is on Ethereum.
It’s not just Africa where it’s become so much more popular. It comes back to the fact that if I want to use Ethereum, it’s expensive.
If I’m a guy who sells shoes on the side of the road in any part of Africa and I need to facilitate imports using USDT, I don’t care about the $50 that Ethereum wants to charge me. I don’t care about gas fees and any of this other stuff, I just want my transaction to go through, and I want it to be cheap or as close to free as possible.
Tron has been extremely popular, but they made some changes that are going to hurt it in the long run, and I think that it’s now in the best interest of USDT and other stablecoins to make sure that they have liquidity on other low-cost chains, which USDT does not right now.
So, the ability of USDT to make that happen is going to be pivotal. USDC, through Circle, has a lot of interoperability on chains and so they sort of have that, but it’s still not as popular as it needs to be.
There’s just not a lot of liquidity on these chains and so it really comes down to “can these tokens get liquidity on these chains?”
Africa’s Regulatory Advancements
Q: How do you see the regulatory landscape — what needs to happen, and how can crypto exchanges navigate that?
A: Looking broadly across the continent, countries have really come around to and embrace the space.
You’ve seen Nigeria has had guidelines out for over a year now from the Securities and Exchange Commission for Virtual Asset Service Provider (VASP) licensing; the central bank in South Africa has put out guidelines for VASP licensing.
We have the license in Botswana; we have licensing for the Economic and Monetary Community of Central Africa, which has gone a step further to look into licensing VASPs specifically; we’ve seen bills in Parliament in Kenya and Morocco and other places.
There’s quite a bit going on and the industry is evolving in a positive way on the continent.
A lot of that speaks to the work that our team has done going around and engaging with regulators. For most of the countries that we operate in, we’re the only crypto company that formally operates in those countries.
Something that I’ve always firmly believed is that we are essentially representing the industry in these countries, and it should be significantly easier for somebody to do what we’re doing after us than it was for us, which sounds counter-intuitive but it’s critically important for the growth of the continent that we encourage this industry and that countries adapt and adopt smart regulations for the industry.
I don’t buy into the attitude that you use regulation to beat down everybody around you and then use regulation to form a crazy moat — I think the industry should be open.
Obviously, there needs to be restrictions — the reality is not everybody should be operating in this industry; there are a lot of scams in the industry and a lot of bad stuff.
It is still very important that there is diligence on companies and that the license should not be a walk in the park — there should be quite a bit that goes into getting it. You need to have a world-class compliance program and a world-class team.
I do think for some countries that the licensing regimes should be a little bit more strict. But regardless, it’s a step in the right direction that there is licensing, and that there is a lot of formality around the space now.
The Future of Crypto in Africa
Q: How can service providers that are incorporating stablecoins or crypto foster trust and credibility?
A: It is very important that stablecoin providers distinguish themselves from the rest of the crowd.
Unfortunately, we’ve had a lot of scams in the industry, and what’s crazy is that in some countries, so many people that we talked to actually learned about crypto because of scams, because it’s the scams that have become so prevalent.
If your introduction to the industry is getting your money stolen, it’s not a great picture to paint for the industry.
It’s critical that the major stablecoin providers out there have engagement of their own with these regulators, making sure that they understand where the money is sitting, how the money is protected, and where they’re regulated, because regulators do care about that.
Part of it is up to the stablecoin issuers to come in and do some of that. Obviously, Bitcoin doesn’t have a company behind it to vouch for it, so it’s up to you and me to vouch, but for the stablecoins, it’s critical that they distance themselves and show how they’re distinct from companies like Terra Luna UST that blew up — the stablecoin turned out to not be so stable.
It’s critical that these guys are doing that engagement as well and are part of that conversation.
Q: How do you see the cryptocurrency ecosystem transforming the financial system in Africa in the future?
A: Where it really transforms the financial system is with cross-border payments and interactions. It’ll be a cold day in hell before you walk into a coffee shop in Johannesburg and you’re paying for your latte with Bitcoin or USDT. I just don’t see that as a legitimate use case on the continent. Local payment methods and local currencies are very strong for local payments.
If I’m in Nigeria, it’s much easier for me to pay with a bank transfer than it is to pay with even USDC.
But the moment you need to cross borders on the continent — and there are a lot of borders in the continent — it becomes extremely difficult. Countries that are next door to each other don’t have the same currency, the same banking system, or any of the interoperability that Europe enjoys with the bloc currency.
That’s where stablecoins are going to come in and help transform the continent by providing it with the ability to be as interoperable as something like the euro — making it as easy as possible for payments to be made intra-Africa and across borders and vice versa.
Stablecoins are making it unbelievably easy for money to flow into these countries and receive that value because it’s unreasonably difficult to send money into some countries.
It always amazes me when wires are returned while we’re trying to send dollars in. That’s really what stablecoins are going to be doing — revolutionizing the way that money moves across borders on the continent and around the world.
Q: What should the industry in other parts of the world know about crypto in Africa?
A: It’s booming, baby! People don’t realize that six of the top 20 countries in the world for crypto adoption are African countries. It’s a continent that is used to leapfrogging technology, jumping over landlines, and other technologies that we’ve had in the West.
Stablecoins and crypto are the first technology that the continent is not behind on, but is actually leading the charge.
With the Internet and other technologies, Africa was a little late to the party. That’s why you don’t see the tech and Internet giants that we have in the US typically on the continent — that’s why Google’s in San Francisco and not in Lagos.
With crypto and stablecoins, it’s going to be a much more even playing field — the continent is really meeting the charge.
