Stablecoin adoption is on the rise, and interestingly enough, these digital assets are boosting US dollar dominance around the world.
Data from DeFiLIama revealed last week that stablecoins’ total market capitalization was worth $170 billion. This marks a 42.86% increase from the $119.1 billion market capitalization stablecoins saw in November last year.
Additionally, a new report sponsored by global payment giant Visa found that stablecoin adoption is rising as a monetary instrument rather than a digital asset used for trading and speculation.
The report—authored by Castle Island Ventures and Brevan Howard Digital—specifically states “that stablecoins have indeed found growing nontrading usage, particularly in emerging markets.”
Stablecoins Become Widely Adopted In Emerging Markets
This appears to be the case in regions with unstable local currencies or where access to traditional US dollars is limited.
Findings from a report published by The Centre For Economics and Business Research show that stablecoins have helped mitigate currency volatility losses in a number of emerging markets.
The report also notes that stablecoins are unlocking capital by enabling faster and more efficient settlements. These efficiency gains are projected to generate an additional $2.9 billion in economic returns for emerging markets by 2027.
Chris Maurice, CEO and Founder of Yellow Card, a fintech company operating in 20 African countries, told Cryptonews that stablecoins primarily offer a clear store of value.
“In Africa, stablecoins are used for international payments, savings, and treasury management,” Maurice said.
He added that crypto adoption via stablecoins in Nigeria continues to grow rapidly.
“With a population of 222 million and a median age of 18, Nigeria is not only Africa’s most populous country, but also leads the world in crypto utilization,” Maurice pointed out. “Between July 2022 and June 2023, Nigeria’s crypto transaction volume grew 9%, reaching $56.7 billion.”
Stablecoin Education Focuses on Emerging Markets
Since stablecoins are being leveraged more in emerging markets, new educational initiatives are being created to help educate users in these regions.
For example, Tether (USDT), the largest stablecoin issuer, launched a learning program on September 10 focused on promoting blockchain technology and stablecoin education.
Valora, a mobile digital wallet, is collaborating with Tether on this initiative to demonstrate real-world stablecoin use cases taking place on the Ethereum layer-2 network, Celo. The program is called “The Valora Learning Program featuring Tether on Celo,” and will be launched in Nigeria, South Africa, Brazil, Turkey, and Vietnam.
Jackie Bona, CEO of Valora, told Cryptonews that the program would utilize the Valora mobile app to demonstrate real-world use cases of stablecoins to users in emerging markets.
“Through interactive learning modules, participants gain hands-on experience and can earn digital asset rewards, which they can use immediately to save, send, or receive funds globally within the Valora wallet,” Bona said.
Bona added that this education program has set a goal of onboarding more than 100,000 new Web3 users into the Valora mobile app.
This also isn’t the first time Tether has launched a learning initiative focused on stablecoins. In July, Tether collaborated with the Vietnam Blockchain Association (VBA) to educate public stakeholders in that region on stablecoins.
Maurice shared that Yellow Card also offers a digital asset course through “Yellow Card Academy.” This is a free online learning platform accessible to individuals, businesses, and schools across Africa.
“Yellow Card Academy features content ranging from basic financial literacy to advanced blockchain topics, all written by local authors and designed to help anyone on the continent understand how this technology works and how it can benefit them,” he said.
Maurice added that Yellow Card Academy seeks to ensure that every person in Africa benefits from a financial system built specifically for them.
Challenges May Hamper Stablecoin Adoption
Eric Jardine, Cybercrimes Research Lead at Chainalysis, told Cryptonews that while educational efforts show people why stablecoins are useful, access to infrastructure could be problematic.
“As a digital asset, access to infrastructure (internet connections, mobile devices, etc.) is obviously a prerequisite for use,” Jardine said. “So adoption of stablecoins is not independent of the available digital infrastructure in a country.”
While infrastructure in Africa remains a challenge, Maurice noted that Yellow Card mostly works with businesses.
“What Stablecoins are doing in practice in Africa isn’t natively reaching individuals in rural parts of the continent where Internet connectivity is still a challenge, they are enabling businesses to more efficiently and effectively operate,” he remarked.
Infrastructure aside, Jardine added that clear regulations are further needed to ensure the positive adoption of stablecoins.
“The absence of a good rule set can change who adopts the tool and for what purpose,” he remarked.
Fortunately, it appears that African regions, like Nigeria, are working hard to enforce clear rules around digital assets.
This month, Nigeria’s SEC Director General stated that the region “Will begin enforcement actions against anyone operating in this market without the intention of being regulated.”
Last month, Nigeria granted licenses to cryptocurrency exchanges Quidax and Busha.
In addition, the SEC in Nigeria announced that five other firms have been admitted to test their business models and technologies under the SEC’s Regulatory Incubation Program (RI).
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