In-depth | The Myths and Realities of Stablecoins: A Field Guide from 20 African Countries

Author: Adeola Adedewe, Founder and CEO of Kredete

Translation: Felix, PANews

Africa is not a single market but consists of 54 markets with different regulatory bodies, central bank policies, and political realities. The quickest way to frustrate yourself is to start with a slide that says "Africa," as if it were a country, and then pitch a one-size-fits-all stablecoin story. The Kredete team has just concluded visits to 20 countries, engaging with over a hundred bankers, regulators, and policymakers. This is a pragmatic summary of the realities on the ground—what misconceptions exist, what the realities are, and what conditions are needed to implement stablecoins.

Key Points:

Stablecoins in Africa are in a delicate balance between policy preferences and political risks. In some instances, they are seen as pilot projects with a green light, while in others, any unauthorized activity can force you to exit.
Currently, only a few countries have operational Virtual Asset Service Provider (VASP) licensing systems. Several others are still in sandbox testing or draft legislation stages. Do not confuse consultation documents with licenses.
Banks will act when relationships, regulatory assurances, and risk narratives align, not because you posted on LinkedIn about "launching business in Africa."
The quickest credibility check: Can your banking counterpart submit your proposal to the central bank and receive a swift "no objection" response? If not, you are wasting your efforts.

Misconceptions and Realities (from real cases)

Misconception 1: "Africa needs our stablecoin."

Reality: Africa needs regulated foreign exchange trading channels, predictable settlements, and strict KYC/AML processes. In some areas, bank-issued tokenized deposits are superior to public chain stablecoins at the institutional level. In other areas, fiat settlement APIs with appropriate reporting capabilities are preferable to any tokenized solution. Users want funds that can circulate and settle, not a white paper.

Misconception 2: "The African continent already has ten VASP licenses live—so let's act quickly."

Reality: The noise online conflates draft laws, sandboxes, and formal licenses. In reality, very few regulatory frameworks are fully operational and actually issue licenses—and these licenses come with ongoing regulatory scrutiny. Announcements on LinkedIn do not equate to regulatory authorization.

Misconception 3: "African banks are eager to collaborate with global cryptocurrency startups."

Reality: African banks are eager to preserve their licenses. Leadership considerations include: Will this trigger a warning letter from the central bank? Will our correspondent banks raise tricky questions? Will this disrupt foreign exchange regulations? If your answer is "not yet," then they will not take action—regardless of how many "daily active user" slides you present.

Misconception 4: "We can remotely control Africa from our joint offices in Miami, Tel Aviv, or São Paulo."

Reality: This is a relationship-driven market. If you do not have local supporters who can take your team to meet the director or at least the appropriate department head, you will waste years in a "launching soon" state. Locals know who signs off, who truly makes decisions, and which weeks to avoid calling—or you can fly over to build relationships in person.

North Africa: The Intersection of Currency Regulation and Cryptocurrency Hype

North Africa is a prime example of the stark contrast between social media narratives and street-level realities. Dinars, dirhams, and pounds are tightly controlled currencies. These countries implement strict foreign exchange control regulations. This means that unauthorized capital flows, offshore accounts, or retail-level cryptocurrency trading can quickly violate currency laws.

The practical situation is:

Banks' risk committees view unauthorized cryptocurrency inflows as foreign exchange losses. Even if you are pitching "just stablecoins," the legal basis is often foreign exchange violations rather than cryptocurrency-specific regulations.
Enforcement is not just theoretical. If your actions are deemed to violate foreign exchange controls, penalties can include fines and imprisonment. This is the harsh reality behind the "cryptocurrency adoption rate" charts.
Additionally, regulatory trends and debates are ever-evolving, including discussions about "sandboxes" and recognition of the existence of digital asset trading, but this does not mean you can act freely. The path to compliance must go through banks, authorized intermediaries, and rules set by the central bank.

In summary: In jurisdictions with strict foreign exchange controls, your "stablecoin growth cycle" may appear as a model for circumventing currency controls. Do not attend meetings with a PPT that ignores this fact. Base your approach on the laws that are actually enforced.

Regulatory Overview (On-the-ground Insights)

Specific company names will not be mentioned here. The descriptions reflect the situations and operational realities experienced or verified in meetings. The law is evolving; regulatory bodies are also changing. But this provides founders and product teams with a practical mental model.

“Operational VASP systems are in effect”

In these countries, it is indeed possible to apply for, obtain, and accept specialized virtual asset systems (or functionally equivalent licensing pathways) under regulation. Banks, auditors, and compliance teams can endorse this.

South Africa: Crypto assets are regulated as financial products. The licensing system is in effect. Banks and market infrastructure are coordinating. Significant progress has been seen in policy dialogue, and regulatory capacity is real.
Mauritius: A mature and offshore-savvy regulatory body. VASP licenses are genuinely available, with high compliance thresholds. If you say, "We obtained a license here," it carries significant weight for banks.
Seychelles: Although relevant laws were introduced later, a workable licensing framework is now in place. Do not confuse the country’s historical foreign exchange trading issues with its current compliance status—its regulatory system is rapidly maturing.
Namibia: A dedicated virtual asset law has been enacted. Even though secondary regulatory frameworks are still being developed, this provides legal grounds for banks and law firms.
Botswana: Relevant legislation is in place; the attitude is conservative but clear. There is a viable development path for operators willing to comply.

Gray areas, but progress is being made:

Nigeria: The central bank has re-allowed banks to service virtual asset service providers (VASP) under clear rules, while the securities regulator is building a more comprehensive framework. In practice, agreements can be reached with suitable counterparties, but operators must strictly control their risk exposure.

“Drafts, sandboxes, and signals”

Kenya/Rwanda/Ghana: Formal policy drafts, sandboxes, and consultation documents are available. These are not licenses. But if you wish to pilot under regulatory oversight with banks, collaboration with stakeholders will be crucial at this stage. Treat this phase like a bidding process: be prepared with relevant documents, anti-money laundering manuals, and emergency response plans.

“Foreign exchange takes precedence, everything else is secondary”

North Africa and parts of West/Central Africa: Here, currency regulations reign supreme. Your best options are bank-led tokenization pilots, fiat settlements providing bank-level reporting, or collaborating with payment institutions in a strictly regulated environment.

Banks do not buy tokens; they buy risk narratives

When entering the offices of CEOs, group CFOs, and risk managers, what impresses them is not rhetoric like "stablecoins are the future." What impresses them is:

1. Regulatory-first framework

Where do regulators fit into the data flow? What information can the project proactively report—transaction volumes, counterparties, suspicious patterns?

Can banks submit a clear no-objection letter to the central bank within 48 hours? If your documentation adds to the bank's workload, it indicates you are not yet ready to be a partner.

2. Integration of foreign exchange compliance and sanctions monitoring

How do you prevent capital flight and arbitrage? Where are your oracles, price sources, and reconciliation controls located? What is your alert strategy?

3. Consumer harm and reputation risk control

If a journalist tests your product with $200, how do you prevent KYC circumvention? What are your policies for responding to bans, reversals, or fraud? Can banks quickly explain your user experience to the minister?

4. Achieving liquidity and settlement under CEO oversight

Who guarantees the fiat currency at the margins? Who holds the trust accounts? Who is the correspondent bank? What happens if a trading partner at an exchange freezes withdrawals on a Friday night? If you go under, how significant will the bank's losses be?

Banks are buying the assurance that "we won't go under if we partner with you." Your verbal commitments need to be reframed as a risk-minimized narrative that ultimately achieves compliant throughput, not the other way around.

Common Mistakes Made by Non-African Entrepreneurs

“We’ve talked to a bank.” Did you talk to the relationship manager? Or did you meet with an executive who can approve? If your so-called "bank" contact cannot convene a meeting with the CEO/CTO/CFO, then you have not talked to a bank.

“We have connections.” In Africa, "connections" are not a Calendly link. They refer to the right department that can get documents to the central bank. If your partner cannot text the person who writes the memos, you have a long way to go.

“We are compliant in region X, so we can apply for a pass in region Y.” This is not the EU; there are no passes here. Every pathway is earned through effort.

“We can do this without local equity participation.” In many markets, true alignment of interests means having local stakes—from governance to revenue sharing. Otherwise, you are a vendor, not a partner, and vendors can be replaced.

“Cryptocurrency licenses are everywhere now.” No, some are in effect and serious; some are still in draft stages; some are PR-driven. Understand the differences and do not confuse consultation PDFs with "licenses."

Action Guide for Working with Banks (Key to Driving Progress)

Prepare a one-page document for the central bank.

Purpose, flow of funds, customer journey, responsibilities of partner banks, data retention, suspicious transaction reporting/suspicious activity report trigger conditions, travel rule handling, and exit mechanisms. Keep it to one page.

Offer a small-scale pilot.

Single channel, limited transaction volume, defined user scope, and clear stop-loss conditions. Define important success metrics for regulators (fraud rate, dispute rate, complaint resolution time), not just for your growth team.

Start reporting from day one.

Provide daily transaction volume and anomaly reports to partner banks; weekly summaries for policymakers to read; monthly compliance proofs with screenshots and signatures.

Equip the product with audit tools.

Build a regulatory view: provide downloadable CSV files containing KYC hashes, sanction results, transaction flags, and end-to-end timestamps. If regulators request a sample of 50 transactions, you should be able to export it within five minutes.

Communicate through discreet channels wisely; do not act hastily.

You need reputable local partners who can discreetly and credibly help you gauge the right people. Self-aggrandizing posts are harmful and unhelpful. Recommendations are what matter.

Understand the actual foreign exchange situation.

In regions with strict foreign exchange controls, the actual exchange rate differences, liquidity windows, and settlement deadlines are more important than "on-chain fees." If you don't know when customs closes, you can't understand the flow of funds.

Stablecoins: When It's a Misconception and When It's Reality

Misconception: By 2030, retail stablecoins will "solve remittance issues across Africa."

Reality: In foreign exchange-controlled markets, retail cryptocurrency entry points are viewed as shadow foreign exchange. Once your fund flows look like disguised currency transactions, you fall under enforcement scrutiny. The best options are bank-led pilot projects (tokenized deposits, controlled stablecoins for B2B settlements) or fiat channels with transparent pricing.

Misconception: "If we just train regulators more, they will approve it."

Reality: Regulators are not waiting for webinars. They are managing inflation targets, currency stability, and systemic risks. Education is helpful, but the key is to demonstrate a compliant tool that does not hinder their policy objectives.

Reality: When stablecoins are designed as tools issued or backed by banks, with clear redemption mechanisms, audited reserves, and real-time regulatory visibility, they can become a compliant feature. In such an environment, the term "stablecoin" is no longer just a name but becomes a mechanism.

Reality: In certain areas, stablecoins are the only currencies that can be transparently settled around the clock—but only if your partners can legally hold, redeem, and report. Otherwise, you have merely built a pretty but unusable demo version.

Field Notes from 20 Countries

Executives want specific details, not slogans. "Who holds the funds? Who is responsible for what? What situations could go wrong?" If your answers are vague, the meeting will politely end, and nothing will happen.

The influence of competitors is real. Once you mention a competitor bank in the region, their interest will significantly increase. "If they are paying attention to this, we should at least listen." Strategically leverage this—but never bluff. Once you bluff, subsequent calls with that competitor will end your business process.

A CEO in the room = action. This is not uncommon. If the group CEO or actual decision-maker is present, you will leave with a to-do list. If you only stay at the level of "innovation" or "collaboration," you will leave empty-handed.

The role of embassies and trade offices is often underestimated. While they cannot help you obtain licenses, they can open doors for you, demonstrate your sincerity, and reduce the risks of travel and meeting arrangements. Make good use of them.

Mobile payment channels can either be the best helpers or the biggest compliance headaches. In some countries, they are the fastest and most economical "last mile"; in others, due to issues like agent network and customer identity information leaks, they become regulatory "tightropes." Your banking partners will tell you the specifics.

Language and legal nuances matter. "Approval," "no objection," "comfort letter," "registration," "license"—these terms are not synonymous. Be precise in your wording, or you will come off as unprofessional.

Wise Ways to Verify African Claims (Before Pitching)

Is it law, regulation, or just a news report?

The bank's legal team will read laws and signed regulations.

If there are relevant systems, are licenses actually issued?

"Draft framework" does not equal "formal license."

What is the central bank's view on foreign exchange trading in this jurisdiction?

Closed currency? Convertibility restrictions? Reporting thresholds? If you can't clarify these, you are not ready.

If the bank collaborates with you, what are their reporting obligations?

Do they have to submit summaries weekly? Real-time suspicious activities? Are you letting them evade audits?

What does "consumer harm" look like here?

In some markets, a large number of complaints on social media can trigger policy-making. In other markets, a newspaper article can get you a call from the minister.

Who are your local introducers?

Which law firm, former regulator, or respected practitioner will take your call? If the answer is "we are compliant globally," then you have no guarantees locally.

Etiquette and Strategy: How to Meet with Bank Executives and Regulators (Successful Experiences)

Bring business cards. Old-fashioned? Yes. But very effective. Business cards will be passed up the chain.

Be on time. These are hard rule cultures. If you are late, you lose the opportunity.

Be courteous and seek support from the highest levels. If your network can legally bring the group CEO or board members into the meeting room, do so. When the boss is involved, decisions will accelerate.

Wisely leverage competitors' curiosity. Mentioning the interests of competing banks can turn coffee time into a working meeting. But only do this if it is true.

Ask how to prepare proposals for the central bank. Don't wait for others to tell you. Submit drafts in the meeting room.

Bring a checklist. Who will complete what work and when? Which pilot project? What are the limitations? Follow up the same day with a one-page summary.

A Message to African Founders

Downplay the rhetoric of "we are solving African problems." Get out more, meet with bank operations teams, talk to regulators, and listen to their voices. The African continent does not need saviors; it needs partners who can coordinate policies, products, and politics. If you are serious, find the most well-connected and trustworthy person in Africa to sponsor you. If you can't find one, then this is not your market—at least not yet.

Also, please stop announcing "bank partnerships" when these are merely exploratory calls. You certainly do not want to become the subject of ridicule.

Why Local Capital is Important?

One of the biggest advantages seen during visits: incorporating Africa's largest venture capital firms into the equity structure. The team has spent years building relationships, trust, and regulatory expertise that no presentation or cold call can replicate, and they have participated in many meetings together—the way doors open is vastly different. The welcome is warmer, the conversations are more candid, and trust is established immediately.

This is where the real value lies: the team brings technology, and they bring policy and banking terminology. It is this combination that transforms the team from "just another cryptocurrency-peddling startup" into a trusted partner worthy of bank collaboration.

Not to flatter them, but the fact is they have put in a lot of effort to facilitate these conversations. Coupled with execution on the product side, a potential unicorn has been born.

After visiting 20 countries and over 100 banks, it is clear: now is a great time for African founders to build real-world products. This opportunity is not "crypto for crypto's sake." It is about regulated cross-border value flows that respect currency regulations, consumer protection, and foreign exchange policies.

If you are building, here is the ultimate checklist:

Choose a channel and dominate it.
Design dashboards for executives, not just for your team's growth.
Treat foreign exchange law as the first principle.
Equip with local staff. Managers, compliance officers, and legal advisors who can access the relevant offices without a calendar link.
Treat licenses as living entities. If you want to reap benefits, you must accept regulation.

Africa is about relationships, details, and rules. Respect these three, and you can launch lasting products.

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