The Overblown Hyperbole of Africa’s Crypto Market Size

May 25, 2024

The Overblown Hyperbole of Africa’s Crypto Market Size

May 25, 2024

Key Insights

The true size of Africa’s crypto market is uncertain and often misreported due to the informal structure and lack of comprehensive data, with industry estimates not fully capturing the depth and diversity of crypto activities on the ground.
Accurate measurement of Africa’s crypto market is hindered by the anonymity of transactions and the informal nature of the market.
Leveraging blockchain analytics tools can help track illicit activities and provide better insights into the market size.

Primer

Most of you will agree with me that Africa’s crypto size is not as reported.

According to Chainalysis, Sub-Saharan Africa received around $117.1 billion in on-chain value from July 2022 to June 2023.
This value is forecasted to hit US$457.0m in 2024.
Narrowing down to size, Triple-A estimated that 6.1 million Kenyans, 5.8 South Africans, and 22 million Nigerians own crypto.
While on-chain data indicates movements of crypto in and out of exchange services, the number of Africans and the amount owned is unknown. What, then, is the true size of Africa’s crypto market?

There is uncertainty and a lack of consensus among authorities about Africa’s crypto assets market’s size, structure, and risks. The informal structure of the crypto asset market hinders the development of a domestic market infrastructure aligned with international best practices.

Q&A to Shed More Light

1. Do you think the size of Africa’s crypto market is as reported in industry reports like Chainalysis and CV VC?

Victor: The reported size of Africa’s crypto market in industry reports like Chainalysis and CV VC certainly provides valuable insights. However, it’s essential to acknowledge the limitations inherent in such assessments.

Africa’s crypto market is undoubtedly growing, fueled by increasing adoption and innovation across the continent.

Therefore, the reported figures may not fully capture the diversity and depth of crypto activities happening on the ground.

2. How can the government and industry stakeholders capture the actual size of Africa’s crypto asset market owing to the anonymity of most crypto transactions?

Victor: Capturing the actual size of Africa’s crypto asset market should consider the unique challenges and opportunities present in the region.

It will be a challenging task, but industry stakeholders in Africa can leverage various strategies to gain a more accurate understanding. This includes fostering collaboration between regulatory bodies, financial institutions, and blockchain analytics firms to develop robust monitoring and reporting frameworks.

Additionally, promoting education and awareness among users can encourage responsible and transparent participation in the crypto surveys.

3. How can virtual asset service providers help provide data that can be used to capture the real size?

Victor: Virtual asset service providers should implement robust compliance measures, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols to enhance the transparency and accountability within the ecosystem.

Furthermore, investing in technology solutions, such as blockchain analytics tools, can help identify and track illicit activities while preserving user privacy.

Final Take

The crypto market in Africa will continue to grow but data about its real size will depend on the availability of comprehensive policies that promote reporting and disclosure, not the other way round. The market is diverse with investment opportunities going beyond crypto to NFTs, Web3 gaming, decentralised stroge provide, etc. Although wholesale trading is diminishing and entertaining the prospects of CBDCs, retail trading is still “king’ – this where the real market size lies.