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

Author: Adeola Adedewe, Founder and CEO of Kredete

Compiled by: White55, Mars Finance

Africa is not a single market but consists of 54 markets, each 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 single country, and then pitch a one-size-fits-all stablecoin story. The Kredete team has just concluded visits to 20 countries and engaged with over a hundred bankers, regulators, and policymakers. This is a pragmatic summary of the actual situation—what are misconceptions, what is reality, and what conditions are needed to achieve 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 all the way. However, in other areas, any unauthorized activity may force you to withdraw.

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 the relationship, regulatory safeguards, and risk narrative align, rather than because you posted a LinkedIn post about "launching business in Africa."

Fastest credibility check: Can your banking counterpart submit your proposal to the central bank and quickly receive a "no objection" response? If not, then you are just wasting your effort.

Misconceptions and Reality (Based on Real Cases)

Myth 1: "Africa needs our stablecoins."

Reality: Africa needs regulated forex trading channels, predictable settlements, and strict KYC/AML processes. In certain areas, bank-issued tokenized deposits are superior to public chain stablecoins at the institutional level. In other areas, fiat settlement APIs with proper reporting functions are better than any tokenized solution. Users want funds that can circulate and settle, not white papers.

Misconception 2: "There are already ten VASP licenses launched on the African continent—so hurry up and take action."

Reality: The noise online conflates legal drafts, sandboxes, and formal licenses. In reality, very few regulatory frameworks are truly fully effective and actually issue licenses — and these licenses come with ongoing regulation. Announcements on LinkedIn are not equivalent to regulatory authorization.

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

Reality: Banks in Africa are eager to keep their licenses. Leadership considerations: Will this trigger a warning letter from the central bank? Will our correspondent banks raise tricky questions? Will this undermine foreign exchange regulations? If your answer is "not yet", then they will not take action—no matter how many slides of "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 to take your team to meet the director, or at least the right department head, you will spend years in a "pre-launch" state. Locals know who signs, who really makes decisions, and which week to avoid calling—or you fly over to build relationships in person.

North Africa: The Intersection of Currency Regulations and the Cryptocurrency Boom

North Africa is an excellent example of the stark contrast between what is said on social media and the realities on the streets. Dinars, dirhams, and pounds are all tightly controlled currencies. These countries implement strict foreign exchange control regulations. This means that unauthorized capital flows, overseas accounts, or cryptocurrency trading at the retail level can quickly violate currency laws.

The situation in practice is:

The bank's risk committee views unauthorized inflows of cryptocurrency as a loss of foreign exchange. Even if you are marketing "just stablecoins," the legal basis is typically foreign exchange violations rather than regulations specific to cryptocurrencies.

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 continue to emerge, including discussions about "sandboxes" and the recognition of digital asset trading, but this does not mean that anything goes. The path of compliance activities 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. It should be based on the laws that are actually enforced.

Regulatory Overview (On-Site Experience)

No specific company names will be mentioned here. It describes the situations and operational realities experienced or verified during the meeting. The law is evolving; regulatory bodies are also changing. But this provides a practical thinking model for founders and product teams.

"The operational VASP system is now in effect"

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

South Africa: Cryptocurrency assets are regulated as financial products. The licensing system has come into effect. Banks and market infrastructure are coordinating. Significant progress has been observed in policy dialogue, and regulatory capacity is genuine.

Mauritius: A mature and proficient regulator for offshore business. The VASP license is real, and the compliance threshold is very high. If you say "We obtained the license here," it indeed holds significant meaning for banks.

Seychelles: Although relevant laws were introduced late, there is now a practical licensing framework in place. Do not confuse the country's historical issues with foreign exchange trading with its current compliance status—its regulatory system is maturing rapidly.

Namibia: A dedicated virtual asset law has been enacted. Even though secondary regulatory regulations are still being formulated, this provides a legal basis for banks and law firms.

Botswana: Relevant legislation is already in place; the attitude is conservative but clear. There is a practical development path for operators willing to operate in compliance.

Gray area, but progressing:

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 reached with suitable counterparties, but operators must strictly control the scope of risks.

Draft, Sandbox, and Signal

Kenya/Rwanda/Ghana: There are formal policy drafts, sandboxes, and consultation documents in place. These are not licenses. However, if you wish to pilot with banks under the supervision of regulators, collaboration with stakeholders will play a role at this time. Treat this stage 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/Central Africa corridor: Here, currency regulations reign supreme. Your best options are bank-led tokenization pilots, fiat settlements that provide bank-level reporting, or collaboration with payment institutions in a strictly regulated environment.

Banks do not buy tokens; they buy risk stories.

When stepping into the offices of those CEOs, Group CFOs, and Risk Officers, what impresses them is not the rhetoric of "stablecoins are the future." What truly impresses them is:

1. Regulatory Priority Framework

What is the position of regulators in the data flow? What information can projects proactively report - trading volume, counterparty, 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 ready to become a partner.

2. Integrate foreign exchange compliance and sanctions monitoring

How to prevent capital 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 journalist tests your product with 200 dollars? What is your policy on response times for bans, revocations, or dealing with 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 manage the trust accounts? Who is the agent bank? What happens if a trading partner of an exchange freezes withdrawals on Friday night? If you go bankrupt, what will be the extent of the bank's losses?

The banks are purchasing a guarantee of "we won't go bankrupt if we cooperate with you." Your verbal commitments need to be rephrased as a risk-minimized narrative that ultimately achieves compliant throughput, rather than the other way around.

Common Mistakes Made by Non-African Entrepreneurs

"We have talked to a bank." Have you spoken with the account manager? Or have you met with any executives who can approve? If your so-called "bank" contacts cannot arrange a meeting with the CEO / CTO / CFO, then you haven't spoken with the bank.

"We have a way." In Africa, "way" does not refer to a Calendly link. It refers to the correct department that allows someone to submit documents to the central bank. If your partner cannot send a text message to the person writing the memo, then 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, and there are no passes this time. Every passage is earned through hard work.

"We can do this without local equity participation." In many markets, true alignment of interests means having local investment—ranging 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 have come into effect and are serious; some are still in draft form; some are of a PR nature. Understand the differences, and don't treat consulting PDFs as "licenses."

Action Guide for Working in Banks (The Key to Truly Driving 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, travel rule processing, and exit mechanisms. Please keep it within one page.

Provide a small-scale pilot.

Single channel, limited trading volume, restricted user scope, and clear stop-loss conditions. Define important success metrics for regulatory agencies (fraud rate, dispute rate, complaint resolution time) rather than just your growth team.

Prepare the report from the first day.

Provide daily transaction volume and anomaly reports to partner banks; provide weekly summaries that policymakers can read; provide monthly compliance certificates, accompanied by screenshots and signatures.

Equip products with auditing tools.

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

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

You need reputable local partners who can discreetly and credibly help you sound out the right people. Self-promotion posts are more harmful than helpful. Recommendations are what truly matter.

Understand the actual foreign exchange situation.

In areas with strict foreign exchange controls, the actual exchange rate differences, liquidity windows, and settlement cut-off times are more important than "on-chain fees." Without knowing when customs closes, one cannot understand the status of the capital channels.

Stablecoins: When are they a misconception and when are they a reality?

Myth: By 2030, stablecoins aimed at retail investors will "solve the remittance problem across Africa."

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

Misconception: "As long as we provide more training to the regulators, they will approve it."

Reality: Regulators will not sit back and wait for webinars. They are managing inflation targets, monetary stability, and systemic risks. Education is certainly helpful, but the key lies in demonstrating a compliant tool that does not hinder their policy objectives.

Reality: When stablecoins are designed to be 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 domains, stablecoins are the only currencies that can be transparently settled around the clock—provided that your partners can legally hold, redeem, and report them. Otherwise, you are just building 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 cause problems?" 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 significantly increase. "If they are paying attention to this, we should at least listen." Strategically leverage this, but do not bluff. Once you bluff, 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 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 may not help you obtain a permit, 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 helper or the biggest compliance headache. In some countries, they are the fastest and most economical "last mile"; while in others, due to issues such as agent network problems and customer identity information leaks, they become regulatory "tightropes". Your banking partners will inform you of the specifics.

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 may appear unprofessional.

A wise way to verify claims related to Africa (before making a 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 really issued?

The "draft framework" does not equal to "formal license".

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

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

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

Do they have to submit a summary every week? Real-time suspicious activity? 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 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 protection 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's also very effective. The business card will be passed on to superiors.

On time. These are rigid cultural rules. If you are late, you lose the opportunity.

Treat others with respect and strive for the highest level of support. If your network can legally bring the group CEO or board members into the meeting room, then do so. When the boss gets involved, decisions will be accelerated.

Wisely leverage the curiosity of competitors. Mentioning the interests of competing banks can turn coffee time into a working meeting. But this should only be done if the situation is true.

Inquire how to prepare a plan 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 day and attach a one-page summary.

To the African founder

Diminish the rhetoric of "we are solving the problems of Africa." Go out more, meet with the banking operations team, talk to regulators, and listen to their voices. The African continent does not need a savior; 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 right now.

Also, please do not announce "bank cooperation" anymore, as these are actually just exploratory calls. You definitely don't want to become the subject of everyone's ridicule.

Why is local capital important?

One of the biggest advantages seen during the visit: incorporating Africa's largest venture capital firm into the equity structure. The team spent years building relationships, trust, and a mastery of regulations, which cannot be replicated by any presentation or telemarketing. Having participated in many meetings with them, the way the doors open is very different. There is a warmer welcome, more open dialogue, and trust is established immediately.

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

Not to flatter them for the sake of flattery, but in fact, they have put in a lot of effort to facilitate these conversations. Coupled with the execution in product aspects, a potential unicorn company has been born.

After visiting 20 countries and over 100 banks, it can be confirmed: now is a great time for African founders to build real-world products. This opportunity is not "crypto for the sake of crypto". Rather, it is about regulated cross-border value flows that respect monetary regulations, consumer protection, and foreign exchange policies.

If you are building, here is the final checklist:

Choose a channel and take the lead.

Dashboard for design supervisors, not just a dashboard for your team's growth.

Treat the foreign exchange law as the primary rule.

Local staff are equipped. Managers, compliance officers, and legal advisors can access the respective offices without calendar links.

Treat licenses as if they were living beings. 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.