Depth | The Myths and Realities of Stablecoins: A Field Guide from 20 African Countries

Author: Adeola Adedewe, Founder and CEO of Kredete

Compiled by: Felix, PANews

Africa is not a single market but is composed of 54 markets, each with different regulatory bodies, different central bank policies, and different political realities. The quickest way to frustrate oneself is to start with a slide that says "Africa," as if it were a single 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 actual situation—what misconceptions exist, what the realities are, and what conditions are needed to achieve a stablecoin.

Key points:

• Stablecoins in Africa are in a delicate balance between policy preferences and political risks. In some cases, they are seen as pilot projects with a green light, while in others, any unauthorized activity forces you to exit.
• Currently, only a few countries have operational Virtual Asset Service Provider (VASP) licensing systems. Several other countries are still in the sandbox testing / draft legislation stage. Do not confuse consultation documents with licenses.
• Banks will take action when relationships, regulatory assurances, and risk narratives align, rather than because you posted a LinkedIn update about "launching business in Africa."
• Fastest credibility verification: Can your banking counterpart submit your proposal to the central bank and quickly receive a "no objection" reply? If not, then you are just wasting your efforts.

Misconceptions and Reality (from real cases)

Myth 1: "Africa needs our stablecoins."

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

Myth 2: "There are already ten VASP licenses online in the African continent—so hurry up and take action."

Reality: The noise online conflates legal drafts, sandboxes, and formal licenses. In practice, very few regulatory frameworks are truly fully effective and actually issue licenses—and these licenses come with ongoing regulation. 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's considerations: Will this result in a warning letter from the central bank? Will our correspondent banks raise tricky questions? Will this undermine foreign exchange regulation? If your answer is "not yet", then they will not take action — no matter how many slides showing "daily active users" you present.

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

Reality: This is a relational market. If you don't 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 "pre-launch" state. Locals know who signs, who really makes decisions, and which weeks to avoid calling - or you can fly over to build relationships in person.

North Africa: A Convergence of Currency Regulations and the Cryptocurrency Boom

North Africa is an excellent example where the discourse on social media greatly contrasts with street reality. Dinars, dirhams, and pounds are currencies that are strictly regulated. These countries implement stringent foreign exchange control regulations. This means that unauthorized capital flows, offshore accounts, or cryptocurrency transactions at the retail level can quickly violate monetary laws.

The situation in practice is:

• The bank's risk committee views unauthorized inflows of cryptocurrency as foreign exchange outflows. Even if you are promoting "just stablecoins," the legal basis is usually foreign exchange violations, rather than regulations specific to cryptocurrency.
• Enforcement is not just a theoretical discussion. If your actions are deemed to violate foreign exchange controls, penalties may include fines and imprisonment. This is the harsh reality behind the "cryptocurrency adoption rate" chart.
• In addition, regulatory trends and debates are emerging one after another, including discussions about "sandboxes" and the recognition of digital asset trading, but this does not mean that anything goes. The path to compliance must go through banks, authorized intermediaries, and rules set by central banks.

In summary: In jurisdictions with strict foreign exchange controls, your "stablecoin growth cycle" may appear to be a way to circumvent currency controls. Do not attend with a PPT that ignores this point. Always adhere to the laws in practice.

Regulatory Overview (On-Site Experience)

Specific company names will not be mentioned here. It describes the situations and operational realities experienced or verified during the meeting. The law is evolving; regulatory agencies are also changing. But this provides founders and product teams with a practical mental model.

"The operable VASP system has come into effect"

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

• South Africa: Crypto assets are regulated as financial products. The licensing system is now in effect. Banks and market infrastructure are coordinating. Significant progress has been seen in policy dialogue, and regulatory capacity is genuine.
• Mauritius: A mature and proficient regulatory body for offshore business. The VASP license is real and has a high compliance threshold. If you say "We have obtained a license here," it indeed holds significant meaning for banks.
• Seychelles: Although the relevant laws were introduced relatively late, there is now a feasible licensing framework in place. Do not confuse the historical legacy issues of foreign exchange trading in the country with the current compliance status — its regulatory system is rapidly maturing.
• Namibia: A specific virtual asset law has been enacted. Even though secondary regulatory regulations 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 feasible development path for operators willing to operate in compliance.

Gray area, but making progress:

• Nigeria: The country's central bank has re-allowed banks to provide services to virtual asset service providers (VASP) under clear rules, while the securities regulator is building a more comprehensive framework. In practice, agreements can be made with suitable counterparties, but operators must strictly control the scope of risks.

Draft, Sandbox, and Signal

• Kenya/Rwanda/Ghana: There are already formal policy drafts, sandboxes, and consultation documents. These are not licenses. However, if you wish to pilot with banks under the supervision of regulatory bodies, 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.

"Forex first, everything else second"

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

Banks do not buy tokens; they buy risk stories.

When walking into the offices of those CEOs, group CFOs, and risk managers, what impresses them is not phrases like "stablecoins are the future." What really impresses them is:

1. Regulatory Priority Framework

What position do regulators occupy in the data flow? What information can projects proactively report - trading volume, counterparties, suspicious patterns?

Can the bank submit a clear no-objection letter to the central bank within 48 hours? If your documents increase the workload for the bank, it indicates that you are not yet prepared to become a partner.

2. Incorporating Forex Compliance and Sanctions Monitoring

How to prevent fund outflow and arbitrage? Where are your oracles, price sources, and reconciliation controls located? What is your alert strategy?

3. Consumer Harm and Reputation Risk Control

How can you prevent bypassing KYC if a reporter tests your product with $200? What is your policy on response times for bans, revocations, or addressing fraud? Can banks explain your user experience to the minister in a short time?

4. Achieve liquidity and settlement under the supervision of the CEO

Who will guarantee the fiat currency in the fringe areas? Who will hold the trust account? Who is the agent bank? What happens if the counterparty of an exchange freezes withdrawals on Friday night? If you go bankrupt, how much will the bank lose?

The bank purchases the guarantee of "we will not go bankrupt if you cooperate with us." Your verbal commitment needs to be restated as a narrative that minimizes risk, ultimately achieving compliant throughput, rather than the other way around.

Common Mistakes Made by Non-African Entrepreneurs

"We have talked to a bank." Have you talked to the account manager? Or have you met with an executive who can approve? If your so-called "bank" contact cannot organize a tripartite meeting with the CEO / CTO / CFO, then you haven't talked to the bank.

"We have connections." In Africa, "connections" does not refer to a Calendly link. Rather, it means having the right department to send documents to the central bank. If your partner cannot text the person who writes the memo, you still 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 this time. Each channel is earned through hard work.

"We can do this without local equity participation." In many markets, true alignment of interests means having local stake involvement—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 already in effect and are serious; some are still in draft form; some are for public relations purposes. Understand the differences, and don't treat consulting PDFs as "licenses."

Action Guide for Working in Banking (Key to Driving Real Progress)

Prepare a one-page document for the central bank.

Purpose, flow of funds, customer journey, responsibilities of cooperating banks, data retention, conditions for triggering suspicious transaction reports/suspicious activity reports, handling of travel rules, and exit mechanism. Please keep it within one page.

Provide a small-scale pilot.

Single channel, restricted trading volume, limited user scope, and clear stop-loss conditions. Define important success measurement criteria for regulatory agencies (fraud rate, dispute rate, complaint resolution time), not just for your growth team.

Prepare the report from the first day.

Provide daily transaction volume and anomaly reports to partner banks; provide a summary for policymakers to read weekly; provide compliance certificates monthly, along with screenshots and signatures.

Equipping products with auditing tools.

Build regulatory view: Provide downloadable CSV file containing KYC hash values, sanction results, transaction flags, and end-to-end timestamps. If regulators request a sample of 50 transactions, you should export them within five minutes.

Communicate through secret channels wisely, and do not act rashly.

You need reputable local partners who can quietly and credibly gauge the interest of the right people for you. 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 cutoff times are more important than "on-chain fees." Without knowing when customs closes, it is impossible to understand the status of the capital channel.

Stablecoins: When is it a misconception, and when is it reality

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

Reality: In the foreign exchange control market, retail cryptocurrency entry is seen as shadow foreign exchange. Once your fund flows appear to be disguised currency transactions, you fall under the enforcement scope. The best options are bank-led pilot projects (tokenized deposits, controlled stablecoins for B2B settlement) or fiat channels with transparent pricing.

Myth: "As long as we provide more training for regulators, they will approve it."

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

Reality: When stablecoins are designed as tools issued by banks 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 currency that can be transparently settled around the clock—provided that your partners can legally hold, redeem, and report. Otherwise, you are just building a nice but unusable demo version.

field notes from 20 countries

What executives want are specific details, not slogans. "Who holds the funds? Who is responsible for what? What situations could arise issues?" 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 area, their interest will increase significantly. "If they are paying attention to this matter, we should at least listen." Strategically leverage this - but never bluff. Once you bluff, any subsequent conversations with that competitor will end your business process.

The CEO is in the room = there is action. This situation is not uncommon. If the group CEO or actual decision-maker is present, you will leave with a task list. If you only stay at the level of "innovation" or "cooperation," you will leave empty-handed.

The role of embassies and trade offices is often underestimated. While they may not be able to help you obtain permits, they can open doors for you, demonstrate your sincerity, and reduce the risks associated with travel and meeting arrangements. Make good use of them.

Mobile payment channels can either be the best helpers or the biggest compliance challenges. In some countries, they are the fastest and most economical "last mile"; while in others, due to issues such as agent network and customer identity information leaks, they become the regulatory "tightrope." Your banking partners will provide you with specific details.

The subtle differences in language and law are important. "Approval," "No objection," "Letter of comfort," "Registration," "License"—these terms are not synonymous. Word choice must be precise; otherwise, it can appear unprofessional.

A wise way to verify claims related to Africa (before the recommendation)

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

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

If there are relevant regulations, are licenses actually issued?

• The "draft framework" does not equal to "official license".

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

• Closed currency? Exchange restrictions? Declaration thresholds? If you can't explain these clearly, then you're not ready.

What are the reporting obligations of the bank if they cooperate with you?

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

What does 'consumer harm' look like here?

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

Who is your local introducer?

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

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

Bring your business card. Old-fashioned? That's right. But it works very well. The business card will be passed to superiors.

On time. These are strict cultural regulations. If you are late, you lose your opportunity.

Treat with respect and strive for the highest level of support. If your network can legitimately bring the group CEO or board members into the meeting room, then do so. When the boss gets involved, decision-making will speed up.

Utilize the curiosity of competitors wisely. Mentioning the benefits of competing banks can turn coffee time into a working meeting. But this can only be done if the situation is true.

Inquire how to prepare a proposal for the central bank. Don't wait for others to tell you. Submit the draft in the conference room.

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

To the African founders

Diminish the rhetoric of "we are addressing the African issues." Go out more, meet with the banking operations team, 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 do not announce "bank cooperation" anymore, as these are actually just exploratory calls. You definitely do not want to become the subject of everyone's ridicule.

Why is local capital important?

One of the biggest advantages observed during the visit: incorporating Africa's largest venture capital firm into the equity structure. The team spent years building relationships, trust, and expertise in regulations, which cannot be replicated by any presentation or telemarketing, and they have participated in many meetings together — the way the doors are opened is completely different. There is a warmer welcome, more honest dialogue, and trust is established immediately.

This is where the true value lies: the team brings technology, and they bring policies and banking terminology. It is this combination that has transformed the team from "just another startup selling cryptocurrency" into a trusted partner worthy of collaboration with banks.

It's not to praise them for the sake of praise, but in fact, they have put in a lot of effort to facilitate these dialogues. Coupled with the execution capability in product aspects, a potential unicorn company has been born.

After visiting 20 countries and over 100 banks, it can be concluded that now is a good time for African founders to create real-world products. This opportunity is not "crypto for crypto's sake." Instead, it involves regulated cross-border value flows that respect currency regulations, consumer protection, and foreign exchange policies.

If you are building, here is the final checklist:

• Choose a channel and dominate it.
• A dashboard for the design leader, not just a dashboard for your team's growth.
• Treat foreign exchange law as the first principle.
• Local staff equipped. Managers, compliance officers, and legal advisors can access the respective offices without a calendar link.
• Treat the license as if it were a living being. If you want to reap the benefits, you must accept regulation.

Africa is where relationships lie, where details matter, and where rules exist. By respecting these three, you can produce lasting products.

Related reading: In the era of "compliance washing" for stablecoins, how does the GENIUS Act reshape the global stablecoin landscape?