Chainalysis report: Africa's crypto market has grown by more than 1,200% since 2020

Digital analytics firm Chainalysis reports that Africa’s cryptocurrency market has grown significantly since last year, adding that the region’s share of overall retail transaction volume is higher than the global average.

In a report published on Tuesday, Chainalysis said that the value of the African crypto market grew by more than 1,200% between July 2020 and June 2021, with high cryptocurrency adoption rates in Kenya, South Africa, Nigeria, and Tanzania. The firm added that the popularity of P2P platforms could be one of the driving factors for wider cryptocurrency adoption in the region, given that some countries have restricted or banned residents from sending remittances to exchanges through local banks.

According to Chainalysis, the continent as a whole received $105.6 billion worth of cryptocurrencies between July 2020 and June 2021. However, of the total market volume made up of “retail-scale transfers,” Africa accounts for a larger share than any other region in the world — about 7%, compared to the global average of 5.5%. In addition, P2P platforms — including Paxful and LocalBitcoins — account for 1.2% of all cryptocurrency transactions in Africa.

“In many of these frontier markets, people can’t send funds from their bank accounts to centralized exchanges, so they rely on P2P,” said Artur Schaback, co-founder and COO of Paxful. “As crypto products become more user-friendly, they can bring more people into the crypto economy and help them see that cryptocurrency transactions are faster, cheaper, and more convenient.”

Other drivers of cryptocurrency adoption in the region could include remittances, where cryptocurrencies could serve as a means of circumventing government restrictions on the amount of money people can send abroad. Many users in Africa may also use cryptocurrencies as a faster and cheaper way to pay for international business transactions and hold their savings to avoid any possible fluctuations in the value of fiat currencies.

Nigeria is planning to pilot its central bank digital currency, eNaira, starting October 1. South Africa is also involved in a joint plan with Australia, Singapore, and Malaysia to launch a fiat-pegged digital currency, but has yet to announce a possible start date for CBDC trials.