Crypto: Africa Records Highest Stablecoin Conversion Spreads, Data Shows
Data observed across 66 corridors in Africa shows conversion costs from 1.5% to 19% in January, with competition driving pricing gaps.
Africa recorded the highest median stablecoin-to-fiat conversion spreads among tracked regions in January, according to data observed by payments infrastructure company Borderless.xyz, covering 66 currency corridors and nearly 94,000 rate observations.
The regional median spread was 299 basis points, or about 3%, compared with about 1.3% in Latin America and 0.07% in Asia. In Africa, conversion costs ranged from about 1.5% in South Africa to nearly 19.5% in Botswana.
The data measures “spreads,” or the gap between a provider’s buy and sell rate for a stablecoin-to-fiat pair. Similar to a bid-ask spread in traditional markets, it reflects the execution cost paid when converting stablecoins into local fiat currency.
The findings suggest that while stablecoins are promoted as a cheaper alternative to traditional remittance rails, actual costs vary widely across African markets and appear closely tied to local provider competition and liquidity.
Borderless.xyz found that markets with several competing providers generally had conversion costs from about 1.5% to 4%. In markets with only one provider, costs often exceeded 13%.
Botswana recorded the highest median conversion cost in January at 19.4%, though pricing improved later in the month. Congo's costs were also above 13%. By contrast, South Africa, which has a more competitive foreign exchange market, showed costs of about 1.5%.
The report suggested that these differences are driven primarily by local market conditions, such as liquidity and competition, rather than the underlying blockchain technology. In countries where multiple providers operate, conversion costs stayed closer to the regional average.
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The report also compares stablecoin mid-rates with traditional interbank foreign exchange rates, measuring what it calls the “TradFi premium.”
Source: CoinTelegraph
