The founder of an African stablecoin association said he supports BitMEX founder Arthur Hayes’ claim that one-third of Nigeria’s GDP is conducted in USDT. He emphasized that stablecoins are a vital economic lifeline for emerging markets and marginalized communities.
Stablecoins an Economic Lifeline
A founder of a Nigerian stablecoin platform has backed BitMEX founder Arthur Hayes’ assertions in a recent blog that a third of Nigerian gross domestic product (GDP) is conducted in USDT. According to Nathaniel Luz, who also leads the Africa Stablecoin Network, Hayes’ claims are hardly surprising because stablecoins are proving to be an “economic lifeline” for emerging markets and countries with broken financial systems.
From proving to be a much more effective way of paying for imports to rescuing the financially excluded, stablecoins like USDT are showing themselves to be a life-changing financial innovation. Explaining to Bitcoin.com News why stablecoins are increasingly popular in Africa, Luz said:
They serve as a financial lifeline for individuals who need to make prompt payments to import goods. They serve as an economic lifeline for people who have been marginalized, specifically those who cannot access funds through conventional banking apps. They are an economic lifeline for third-world countries, emerging markets, and people whom the big financial players have marginalized. Stablecoins do not discriminate.
In his recent blog post, Hayes revealed that a board member of an unnamed major U.S. bank highlighted the threat posed by stablecoins to a business model that has earned financial services billions of dollars for years. According to Hayes, the said board member believes stablecoins are inevitable; therefore, financial institutions must adapt or sink.
While a growing number of U.S.-based financial institutions are eagerly exploring the launch of their own stablecoins, these ambitions remain largely tethered to the elusive promise of a clear regulatory framework. Of the two stablecoin bills currently before U.S. lawmakers, only the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act has managed to clear significant legislative hurdles.
Africa More Than Ready for Stablecoins
Analysts contend that only after a definitive and comprehensive law is enacted will a floodgate truly open for companies seeking to introduce their stablecoin offerings. However, unlike in the U.S., which until recently pursued a hostile policy toward digital assets, stablecoins in Africa already have “75% of the criteria for full adoption with a ready market.” According to Luz, while regulation is the only missing piece of the puzzle, some African governments are finally waking up to this reality.
“The current Nigerian government is pro-crypto and pro-stablecoin. Cryptocurrency is entirely legal in Nigeria, and we can see government bodies like the SEC coming up with the ‘Crypto Smart, Nigeria Strong’ initiative to educate and increase the adoption of cryptocurrencies. It is time for Africa, and we are glad to be a part of it,” Luz said.
Regarding his association’s role in promoting the use of stablecoins in Africa, Luz explained that the African Stablecoin Network is focused on stablecoin adoption in Africa. As part of this mandate, the network is set to hold a conference in July that draws stakeholders from the finance and fintech industry.
On lessons that can be drawn from the ongoing process to establish a stablecoin regulatory regime in the U.S., Luz said African governments must distinguish stablecoins from cryptocurrencies.
“Just as the U.S. began with the STABLE and GENIUS Acts, financial regulatory bodies in Nigeria and other African countries must establish separate regulations for stablecoins,” Luz stated.
