By Ciaran Ryan 15 Jan 2024
In recent years, the economic landscape in Africa has undergone significant shifts, particularly in the currency market. The Nigerian naira and the Ghanaian cedi have collectively lost over half their value against the US dollar, while the rand has experienced a close to 17% depreciation. These fluctuations have prompted a paradigm shift in financial strategies across the continent.
Exploring the situation, Luc Varejes, COO at OVEX, sheds light on a growing trend – the adoption of USD-backed stablecoins. These digital assets, pegged to real-world currencies like the US dollar or the rand, have emerged as a beacon of stability in the face of currency volatility.
The rationale behind this surge in popularity lies in the stark depreciation of local currencies against the US dollar. Varejes emphasises that this economic reality has awakened millions to the advantages of stablecoins, offering a secure alternative for financial transactions.
Unlike traditional cryptocurrencies, USD-backed stablecoins are fully collateralised by actual US dollars, providing a level of stability that appeals to investors. Tether, USDC, and Dai, three of the top 20 cryptocurrencies by market cap, collectively boast a market cap of $126 billion.
One primary use case for these stablecoins is their role in risk management for traders. Investors utilise stablecoins to park funds after engaging in volatile assets like bitcoin or ether, avoiding the need to exit the crypto space and incur additional costs.
Varejes notes a significant uptick in stablecoin adoption in countries grappling with currency depreciation and political instability, such as Venezuela, Lebanon, and Nigeria. He acknowledges a learning curve in acquiring stablecoins through local currencies on crypto exchanges but highlights the rapid adaptation of users.
In Africa, where some countries have currency export restrictions, OVEX has played a pivotal role. The crypto company offers a diverse range of stablecoins, enabling clients, particularly importers and exporters, to hedge currency risk or facilitate payments seamlessly.
A noteworthy use case emerges for those looking to protect their savings from currency depreciation. By converting local currency into USD stablecoins, individuals in Nigeria and Ghana avoided losing nearly half the value of their savings during periods of economic downturn.
Companies utilising USD stablecoins for fund management find themselves shielded from local inflation. The ability to convert stablecoins back to local currency at a favourable exchange rate when paying bills ensures a level of financial insulation.
OVEX, recognised for its over-the-counter (OTC) desk facilitating large crypto transactions at a single price, has expanded its footprint across Africa, Europe, and the Middle East. The platform’s upgraded online tool now allows users to obtain instant indicative prices for both cryptocurrencies and fiat currencies.
As institutional adoption of cryptocurrencies gains momentum with the recent approval of bitcoin exchange-traded funds (ETFs) by the US Securities and Exchange Commission, OVEX positions itself as a regulated and licensed entity, offering clients a range of financial services.
In essence, USD-backed stablecoins are proving to be transformative tools in the African financial landscape. OVEX’s commitment to providing a diverse range of stablecoins, coupled with regulatory compliance, positions the platform at the forefront of shaping the future of finance in the region.
“Global 12 Bank: Pioneering the Future of Banking
Hey FinTech enthusiasts! Exciting news on the horizon! Introducing Global 12 Bank – the digital offshore powerhouse set to redefine the future of banking and financial services.
Global 12 Bank is not just a bank; it’s a groundbreaking solution that seamlessly integrates banking, cryptocurrency exchange, credit card services, international security trading, and private investments. Revolutionise your financial experience with a single platform!
Why choose Global 12 Bank? Because we’re not your average bank; we’re a revolutionary force committed to providing a comprehensive suite of services tailored to meet your unique needs.
Dive into a world of innovative and secure banking services that cater to the evolving demands of the digital era. Explore Dedicated IBAN Accounts, SWIFT, SEPA, and Multi-Currency Accounts – each meticulously crafted to ensure smooth cross-border transactions and effortless financial management.
Global 12 takes pride in offering an extensive range of services that go beyond traditional banking, setting a new standard for the industry. Ready to embrace the future of banking with us? Join the revolution!
#Global12Bank #FutureOfBanking #FinTechRevolution #Stablecoins #AfricanFinance #CryptocurrencyRevolution