The Myth and Reality of Stablecoins: A Field Guide from 20 African Countries

# Author: Adeola Adedewe, Founder & CEO of Kredete  

# Translator: White55, Mars Finance  

Africa is not a single market, but a collection of 54 markets—each with distinct regulatory bodies, divergent central bank policies, and unique political realities. The fastest way to frustrate yourself is to open a presentation with a slide labeled "Africa" as if it were a single country, then pitch a one-size-fits-all stablecoin narrative. The Kredete team has just concluded visits to 20 countries, engaging with over 100 bankers, regulators, and policymakers. What follows is a pragmatic summary of the on-the-ground reality: the myths, the truths, and the prerequisites for making stablecoins work.  

## Key Takeaways  

- Stablecoins in Africa exist in a delicate balance between policy openness and political risk. In some contexts, they are viewed as pilot projects and greenlit smoothly; in others, any unlicensed activity will lead to immediate shutdowns.  

- Currently, only a handful of countries have operational Virtual Asset Service Provider (VASP) licensing regimes. A few more are in the sandbox testing/draft bill phase. Do not confuse consultation papers with actual licenses.  

- Banks act when relationships, regulatory safeguards, and risk narratives align—not because you posted a LinkedIn update about your "Africa launch."  

- The quickest credibility test: Can your banking counterparty present your proposal to the central bank and secure a "no-objection" response promptly? If not, you’re wasting your time.  

## Myths vs. Realities (From Real-World Cases)  

### Myth 1: "Africa needs our stablecoin."  

**Reality**: Africa needs regulated foreign exchange (FX) channels, predictable settlements, and robust KYC/AML processes. In some sectors, bank-issued tokenized deposits outperform public-chain stablecoins at the institutional level. In others, fiat settlement APIs with proper reporting capabilities are superior to any tokenized solution. Users want funds that can circulate and settle—not whitepapers.  

### Myth 2: "There are already 10 VASP licenses live across Africa—so move fast!"  

**Reality**: Online noise conflates draft laws, sandboxes, and formal licenses. In practice, very few regulatory regimes are fully operational and actively issuing licenses—with ongoing oversight attached. A LinkedIn announcement is not the same as regulatory authorization.  

### Myth 3: "African banks are eager to partner with global crypto startups."  

**Reality**: African banks are eager to keep their licenses. Leadership asks: Will this get us a warning letter from the central bank? Will our correspondent banks raise red flags? Will this undermine FX regulations? If your answers are "not yet," they won’t act—no matter how many "daily active user" slides you show.  

### Myth 4: "We can run our Africa operations remotely from a co-working space in Miami, Tel Aviv, or São Paulo."  

**Reality**: This is a relationship-driven market. Without local champions who can walk your team into meetings with directors (or at least the right department heads), you’ll be stuck in "launching soon" limbo for years. Locals know who signs off, who makes real decisions, and which weeks to avoid calling—or you’ll have to fly in and build those relationships yourself.  

## North Africa: Where Currency Rules Meet Crypto Hype  

North Africa is a stark example of how social media narratives clash with on-the-ground reality. Currencies like the dinar, dirham, and pound are tightly controlled, with strict FX regulations in place. This means unauthorized fund flows, offshore accounts, or retail crypto transactions can quickly violate currency laws.  

### On-the-Ground Realities:  

- Banks’ risk committees view unlicensed crypto inflows as FX leakage. Even if you pitch "just a stablecoin," the legal basis for pushback is usually FX violations—not crypto-specific rules.  

- Enforcement is not just on paper. If your activities are deemed to violate FX controls, penalties can include fines and imprisonment. This is the unforgiving reality behind "crypto adoption rate" charts.  

- While regulatory developments (e.g., sandbox discussions, recognition of digital asset trading) are ongoing, this does not mean "anything goes." Compliant operations must work through banks, authorized intermediaries, and rules set by central banks.  

**In short**: In jurisdictions with strict FX controls, your "stablecoin growth loop" may look like a currency control workaround. Do not show up with a PowerPoint that ignores this. Focus on laws that are actually enforced.  

## Regulatory Landscape (On-the-Ground Insights)  

No specific company names are mentioned here—this describes trends and operational realities observed or verified in meetings. Laws evolve, and regulators change, but this provides a practical framework for founders and product teams.  

### "Operational VASP Regimes in Place"  

In these countries/regions, you can actually apply for, obtain, and operate under dedicated virtual asset regimes (or functionally equivalent licensing pathways). Banks, auditors, and compliance teams can get on board.  

- **South Africa**: Crypto assets are regulated as financial products. The licensing regime is operational, and banks/market infrastructure are aligning. Noticeable progress in policy dialogue, with real regulatory capacity.  

- **Mauritius**: A mature, offshore-savvy regulator. VASP licenses are genuine, with high compliance thresholds. Saying "we’re licensed here" carries real weight with banks.  

- **Seychelles**: Though laws were enacted later, it now has a workable licensing framework. Do not conflate the country’s historical FX issues with its current compliance status—its regulatory regime is maturing rapidly.  

- **Namibia**: Has introduced dedicated virtual asset legislation. Even as secondary regulations are still being finalized, this provides a legal foundation for banks and law firms.  

- **Botswana**: Relevant legislation exists; the stance is conservative but clear. A viable path exists for operators willing to comply.  

### "Gray Areas, But Progressing"  

- **Nigeria**: The central bank has reallowed banks to serve VASPs under clear rules, while the securities regulator is building a more comprehensive framework. In practice, agreements with the right counterparties are possible—but operators must tightly manage risk parameters.  

### "Drafts, Sandboxes, and Signals"  

- **Kenya/Rwanda/Ghana**: Formal policy drafts, sandboxes, and consultation papers exist. These are not licenses. However, if you want to run pilots with banks under regulatory oversight, engaging stakeholders now pays off. Treat this phase like a tender: prepare documentation, AML manuals, and contingency plans.  

### "FX First, Everything Else Second"  

- **North Africa & Parts of West/Central African Corridors**: Here, currency regulations reign supreme. Your best bets are bank-led tokenization pilots, fiat settlements with bank-grade reporting, or partnerships with payment providers in strictly regulated environments.  

## Banks Don’t Buy Tokens—They Buy Risk Narratives  

When you walk into the offices of CEOs, group CFOs, and risk heads, what persuades them is not rhetoric like "stablecoins are the future." Instead, it’s:  

### 1. Regulator-First Architecture  

- Where do regulators sit in your data flow? What information can your project proactively report—transaction volumes, counterparties, suspicious patterns?  

- Can the bank submit a clear "no-objection" letter to the central bank within 48 hours? If your documentation creates extra work for the bank, you’re not ready to be a partner.  

### 2. Integration with FX Compliance and Sanctions Screening  

- How do you prevent capital flight and arbitrage? Where are your oracles, price feeds, and reconciliation controls located? What’s your alert strategy?  

### 3. Consumer Harm and Reputational Risk Mitigation  

- If a journalist tests your product with $200, how do you prevent KYC bypass? What’s your policy on response times for bans, reversals, or fraud? Can the bank explain your user experience to a minister on short notice?  

### 4. Liquidity and Settlement Oversight by the CEO  

- Who guarantees fiat currency in remote areas? Who holds trust accounts? Who are your correspondent banks? What happens if an exchange counterparty freezes withdrawals on a Friday night? How much would the bank lose if you fail?  

Banks buy the assurance that "we won’t get shut down by partnering with you." Your verbal promises need to be reframed as a risk-minimization narrative—one that prioritizes compliant throughput, not the other way around.  

## Common Mistakes by Non-African Founders  

- **"We’ve talked to a bank."** Did you talk to a relationship manager, or to an executive with decision-making power? If your so-called "bank contact" can’t arrange a meeting with the CEO/CTO/CFO trio, you haven’t talked to the bank.  

- **"We have connections."** In Africa, a "connection" isn’t a Calendly link—it’s someone who can get documents into the right department at the central bank. If your partner can’t text the person writing the memo, you have a long way to go.  

- **"We’re compliant in Region X, so we can get a pass for Region Y."** This isn’t the EU—there are no "passports." Every market requires groundwork.  

- **"We can do this without local equity."** In many markets, true alignment means local stakes—from governance to revenue sharing. Otherwise, you’re a vendor (replaceable), not a partner.  

- **"Crypto licenses are everywhere now."** No—some are operational and serious; others are in draft; some are PR stunts. Understand the difference, and stop treating consultation PDFs as "licenses."  

## Actionable Guide to Working with Banks (What Actually Drives Progress)  

### 1. Prepare a 1-Page Document for the Central Bank  

Include purpose, fund flows, customer journey, partner bank responsibilities, data retention, SAR/STR triggers, travel rule handling, and exit mechanisms. Keep it to one page.  

### 2. Offer Small-Scale Pilots  

Limit to a single channel, cap transaction volumes, restrict user segments, and define clear stop-loss conditions. For regulators, outline meaningful success metrics (fraud rates, dispute rates, complaint resolution time)—not just your growth team’s KPIs.  

### 3. Build Reporting from Day One  

Provide daily transaction volume and outlier reports to your partner bank; weekly summaries readable by policymakers; monthly compliance certificates with screenshots and signatures.  

### 4. Equip Your Product with Audit Tools  

Build a regulatory view: offer downloadable CSVs with KYC hashes, sanctions results, transaction flags, and end-to-end timestamps. If regulators ask for a sample of 50 transactions, you should export it in 5 minutes.  

### 5. Navigate Backchannels Wisely—No Grandstanding  

You need reputable local partners who can quietly and credibly sound out the right people. Boastful posts hurt; referrals help.  

### 6. Understand Actual FX Dynamics  

In tightly regulated FX markets, real exchange rate spreads, liquidity windows, and settlement cutoffs matter more than "on-chain fees." You can’t map a fund channel if you don’t know when the "customs office" closes.  

## Stablecoins: When They’re a Myth, When They’re a Reality  

### Myth: By 2030, retail-focused stablecoins will "solve remittances across Africa."  

**Reality**: In FX-controlled markets, retail crypto onramps are seen as shadow FX. Once your fund flows look like disguised currency trading, you’re in enforcement territory. Your best bets are bank-led pilots (tokenized deposits, controlled stablecoins for B2B settlement) or transparent fiat channels.  

### Myth: "If we just train regulators more, they’ll approve us."  

**Reality**: Regulators don’t wait for webinars—they’re managing inflation targets, currency stability, and systemic risk. Education helps, but the key is demonstrating a compliant tool that doesn’t undermine their policy goals.  

### Reality: Stablecoins work as a compliant feature when designed as bank-issued or bank-backed tools—with clear redemption mechanisms, audited reserves, and real-time regulatory visibility. In this context, "stablecoin" stops being a buzzword and becomes a mechanism.  

### Reality: In some sectors, stablecoins are the only way to enable 24/7 transparent settlement—but only if your partners can legally hold, redeem, and report on them. Otherwise, you’re just building a pretty demo that can’t be used.  

## Field Notes from 20 Countries  

- Executives want specifics, not slogans. "Who holds the funds? Who’s responsible for what? What can go wrong?" Vague answers lead to polite, unproductive meetings.  

- Competitor influence is real. Mentioning a rival bank’s interest in the region instantly boosts engagement: "If they’re looking at this, we should at least listen." Use this strategically—but never bluff. A bluff will end your process once the rival is called.  

- If the CEO is in the room = action. Time and again: if the group CEO or actual decision-maker attends, you’ll leave with a to-do list. If you only talk "innovation" or "collaboration," you’ll leave empty-handed.  

- Embassies and trade offices are underutilized. They can’t get you a license, but they open doors, validate your credibility, and reduce travel/meeting risks. Leverage them.  

- Mobile money channels are either your best ally or biggest compliance headache. In some countries, they’re the fastest, cheapest "last mile"; in others, they’re regulatory tightropes (due to agent network risks, customer ID leaks, etc.). Your bank partner will tell you which.  

- Linguistic and legal nuances matter. "Approval," "no-objection," "comfort letter," "registration," "license"—these are not synonyms. Be precise, or you’ll seem unprofessional.  

## Smart Ways to Verify Africa Claims (Before Pitching)  

1. Is it a law, regulation, or just a news article? Bank legal teams read laws and signed regulations.  

2. If a regime exists, are licenses actually being issued? "Draft framework" ≠ "formal license."  

3. What does the central bank say about FX in that jurisdiction? Closed currency? Convertibility limits? Reporting thresholds? If you can’t explain these, you’re not ready.  

4. What reporting obligations would the bank have if they partner with you? Weekly summaries? Real-time SARs? Are you making them avoid audits?  

5. What counts as "consumer harm" here? In some markets, social media complaints trigger policymaking; in others, a single newspaper article gets you a minister’s call.  

6. Who is your local referrer? Which law firm, former regulator, or respected practitioner will take your call? If your answer is "we’re compliant globally," you have no local cover.  

## Etiquette & Strategy: Meeting Bank Executives and Regulators (Proven Practices)  

- Bring business cards. Old-school? Yes. Effective. They get passed up the chain.  

- Be on time. This is a culture of hard deadlines. Tardiness = lost opportunity.  

- Court top-level support. If your network can legally bring the group CEO or board member into the room, do it. Boss involvement speeds up decisions.  

- Use competitor curiosity wisely. Mentioning a rival bank’s interest can turn a coffee break into a working meeting—*only if it’s true*.  

- Ask how to prepare for the central bank. Don’t wait to be told—share drafts in the room.  

- Bring a checklist. Who does what by when? Which pilot? What limits? Follow up the same day with a 1-page summary.  

## Message to African Founders  

Downplay the "we’re solving Africa’s problems" rhetoric. Get out there: meet bank operations teams, talk to regulators, and listen. Africa doesn’t need saviors—it needs partners who can align policy, product, and politics. If you’re serious, find the most connected, trusted person in Africa to sponsor you. If you can’t, this isn’t your market—not yet.  

Also, stop announcing "bank partnerships" that are just exploratory calls. You don’t want to be the punchline.  

## Why Local Capital Matters  

One of the biggest advantages we saw on our trips: including Africa’s top venture capital firms in the cap table. These teams spent years building relationships, trust, and regulatory fluency—something no deck or cold call can replicate. We sat in meetings with them: doors opened differently. The welcome was warmer, conversations more candid, trust immediate.  

That’s the real value: your team brings the tech; they bring policy and bank language. This combination turns you from "another crypto startup" into a trusted, bankable partner.  

This isn’t hype—these teams put in the work to make these conversations happen. Add product execution, and you have a potential unicorn.  

After 20 countries and 100+ bank meetings, we’re confident: now is the time for African founders to build real-world products. The opportunity isn’t "crypto for crypto’s sake"—it’s regulated cross-border value flows that respect currency laws, consumer protection, and FX policies.  

## Final Checklist If You’re Building  

- Pick one channel and dominate it.  

- Design dashboards for executives—not just your growth team.  

- Treat FX laws as your first rule.  

- Hire local staff: managers, compliance leads, legal counsel who can walk into offices without a calendar link.  

- Treat licenses like living things. If you want the benefits, you must accept the oversight.  

Africa is about relationships, details, and rules. Respect all three, and you’ll build a product that lasts.  

## Disclaimer  

The views expressed in this article are solely those of the author and do not constitute investment advice from this platform. This platform makes no guarantees regarding the accuracy, completeness, originality, or timeliness of the information contained herein, nor shall it be liable for any losses arising from the use of or reliance on such information.