Nigeria has become sub-Saharan Africa’s leader in cross-border stablecoin payments.
That’s according to an International Monetary Fund (IMF) report published Tuesday (June 16), showing that the country accounts for 60% of stablecoin inflows since 2019.
“What began as a niche technology has become a meaningful cross-border payments channel. Its rapid growth is easing long-standing frictions in cross-border transactions,” the report said. “It is also testing the limits of existing monetary and regulatory frameworks.”
The report argued that stablecoins have a straightforward appeal, letting anyone with a smartphone and internet access to receive remittances or make cross-border payments within minutes. The coins provide a practical alternative for people and businesses with limited access to traditional banking channels, the IMF added.
However, the same features that make stablecoins beneficial—faster payments and remittances, financial inclusion—also present “policy tradeoffs,” the report said.
“One is monetary sovereignty,” the IMF wrote. “As stablecoins are typically denominated in U.S. dollars, widespread use can resemble a digital form of dollarization. By reducing demand for the local currency, it could weaken the transmission of domestic monetary policy.”
Financial integrity is another concern, as the monitoring systems for traditional intermediaries may not effectively capture stablecoin transactions.
“The speed and anonymity of some platforms can also increase risks of illicit finance, including money laundering,” the report said. “These risks are not unique to Nigeria, but the scale of adoption makes them more pronounced.”
PYMNTS wrote last month about some of the trade-offs that come with making stablecoin payments in emerging markets.
In places with volatile currencies or limited banking infrastructure, stablecoin-linked payment systems give businesses a more reliable medium for cross-border commerce while upholding compatibility with local payment networks.
However, the degree of innovation that stablecoins offer still come with certain risks. For example, hacks on digital asset bridge solutions account for almost 40% of the entire value of crypto lost due from hacking in the entire history of the digital asset sector. Counterparty risk is a major concern, the report added.
“CFOs are, rightly so, conservative,” Tanner Taddeo, CEO of Stable Sea, told PYMNTS during a recent episode of the From the Block podcast. “They’re not buying innovation. They’re buying to de-risk something … It’s a crawl, walk, run approach to the enterprise because that trust does take time. It’s never given, it’s always earned.”
Meanwhile, research by PYMNTS Intelligence shows that while 42% of middle market companies have at least discussed stablecoins, just 13% report actual stablecoin use.
