Despite figures revealing that sub-Saharan Africa has the lowest cryptocurrency transactions compared to any other region, the continent is home to some of the most advanced cryptocurrency ecosystems, according to the latest findings from Chainalysis.
The report He showed that the excessive use of P2P platforms distinguishes the African region, highlighting that “retail transfers under $10,000 represent 6.4% of its transaction volume, more than any other region. The role of retail becomes even more apparent when we look at the number of individual transfers.”
Increased reliance on P2P in Africa due to regulations
Retail transfer account for 95% of all transactions in the region, according to the report. He added: “P2P exchanges account for 6% of all cryptocurrency transaction volume in Africa, more than double the share of the next closest region, Central and South Asia and Oceania.”
Ray Youssef, CEO of Paxful, also suggested how regulations influence crypto activity while driving reliance on P2P use.
The analyst noted in the report: “Nigeria restricted the use of the naira to buy cryptocurrencies in 2021 due to concerns around scams and tax evasion, and because of that, many people started trading as equals.”
indian too reported increased use of P2P sharing after the Reserve Bank of India maintained a negative stance on the use of cryptocurrencies, which prevented institutional banks from expanding services to the cryptocurrency market.
However, the country’s overall adoption also took a hit as India fell from the second largest crypto-loving population to fourth place year-over-year according to another analysis company report.
the South African Reserve Bank Recently published guidelines for local banks to do business with cryptocurrencies and cryptocurrency companies.
A drop in exchange rates could be driving the use of cryptocurrencies
Previously, the analytics firm noted that Nigeria and Kenya, with the top 20 in the Global Crypto Adoption Index ranking, have a strong presence in the P2P market.
Adedeji Owonibi, the founder of Convexity, a Nigerian-based blockchain startup, told Chainalysis, “We see a lot of day traders who are trading to make ends meet.”
the volatility of the Nigerian naira, he remarked, also contributes to the demand for cryptocurrencies in the nation. Lately, the naira value against the US dollar has been in a decline with the foreign exchange reserves of the Nigerian financial system running low.
Notably, the report finds that crypto use this year is driven by daily necessity rather than speculation by the wealthy, adding: “The number of small retail transfers actually grew from the start of the bear market in May , while the number of transfers of other sizes fell.”
That said, sub-Saharan Africa’s reliance on external remittances and increased trade is driving commercial and other use cases for cryptocurrencies.
Owonibi told the analytics firm, “Companies need to buy materials from the US, but there is no way to get the money there; they have no choice but to use USDT.”
Chainalysis anticipates that the use of cryptocurrencies in sub-Saharan Africa will increase as regulations, economic volatility and the need for cross-border transactions remain in place.
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