Stablecoins, Central Banks and the Search for Africa’s Regulatory Middle Ground
Two weeks ago, I had the privilege of moderating a Central Banks’ Roundtable on stablecoins with senior representatives from four African central banks: Mr. Gallington Mawire, Deputy Director of Financial Markets at the Reserve Bank of Zimbabwe; Mr. Isaac Muhanga, Chief Operations Officer at the Bank of Zambia; Mr. Jimmy Apaa, Director of Financial Markets at the Bank of Uganda; and Dr. Yamungu Kayandabila, Deputy Governor for Economic and Financial Policies at the Bank of Tanzania.
The session was important because stablecoins are no longer a fringe technology conversation. They are increasingly becoming a financial stability, monetary policy, payments, consumer protection and cross-border settlement conversation.
For Africa, the debate cannot be reduced to whether stablecoins are good or bad. That framing is too simplistic for the complexity of our markets.
The more useful question is this: how do we find the intersection between innovation and financial stability?
That intersection matters because African economies face a very specific set of realities. We have high remittance costs, fragmented cross-border payment systems, currency pressures, growing digital finance adoption, expanding mobile money ecosystems, and large informal trade corridors. At the same time, we also have legitimate regulatory concerns around monetary sovereignty, capital movement, anti-money laundering, consumer protection, reserve backing and systemic risk.
Stablecoins sit directly in the middle of these issues.
On one hand, they may offer possibilities for faster and cheaper cross-border transactions, more efficient settlement, digital trade and new forms of financial inclusion. On the other hand, if poorly supervised, they could create risks for domestic currencies, weaken regulatory visibility, enable illicit flows, or introduce new forms of private money that central banks cannot adequately monitor or control.
That is why central banks have to approach this space with both openness and caution.
What stood out to me during the roundtable was the seriousness with which the central banks engaged the subject. This was not a conversation driven by hype. It was also not a conversation driven by fear. It was a pragmatic discussion about what it means to protect the integrity of financial systems while still allowing innovation to solve real problems.
That balance is critical.
If regulation moves too slowly, innovation may happen outside the supervised system. If regulation is too heavy-handed, useful innovation may be pushed away or underground. If regulators dismiss the technology entirely, they risk losing visibility over activities that are already beginning to touch banks, payment systems and consumers. But if innovation is embraced without safeguards, the risks can move faster than the institutional capacity to respond.
Africa cannot afford either extreme.
The continent needs a regulatory posture that is clear, proportionate and forward-looking. Central banks must be able to distinguish between speculative crypto activity, payment-focused stablecoin use cases, tokenised deposits, cross-border settlement tools and broader virtual asset exposure. These are not all the same thing, and they should not all be treated with the same regulatory lens.
The issue is not only about stablecoin issuers. It is also about the wider ecosystem: banks, fintechs, payment service providers, mobile money operators, remittance companies, switches, merchants and consumers. Even where banks are not directly dealing in stablecoins, their customers may already be interacting with exchanges, wallets or offshore platforms. That creates indirect exposure that must be understood.
This is where supervision must evolve.
Regulators and financial institutions need better data on where virtual assets are already touching the formal financial system. Are customers sending funds to known exchanges? Are merchants receiving stablecoin payments informally? Are remittance flows being settled through digital asset channels? Are fintechs building products that depend on offshore stablecoin infrastructure? Are consumers exposed to redemption, custody or fraud risks they do not fully understand?
These are no longer theoretical questions.
For central banks, one of the most important issues is confidence. A stablecoin may claim to be fully backed, but confidence is not created by a statement alone. It depends on the quality of reserves, redemption rights, governance, transparency, auditability, jurisdiction, and the credibility of the institutions behind it.
In countries where currency confidence is already sensitive, this becomes even more important. If a foreign-denominated stablecoin becomes widely used as a store of value or medium of exchange, it could affect demand for local currency, complicate monetary policy transmission and create new forms of dollarisation. That is why stablecoin regulation must be connected to broader macroeconomic realities, not treated only as a technology issue.
At the same time, Africa must be careful not to regulate from a place of anxiety alone.
The current global financial system does not serve Africa perfectly. Cross-border payments remain expensive. Settlement across African markets is often slow and fragmented. Small businesses face friction when trading across borders. Remittances remain a major pain point. Young people and digital businesses are already finding workarounds.
If stablecoins, or stablecoin-like instruments, can help solve some of these problems safely, then African regulators must be part of shaping that future.
The danger is that Africa becomes a rule-taker.
If we wait until global standards are fully designed elsewhere, our realities may not be properly reflected. The regulatory frameworks emerging from advanced markets may not adequately account for mobile money penetration, informal trade, currency volatility, weak correspondent banking relationships, or the unique nature of African payment ecosystems.
Africa needs to participate early and intelligently in the design of stablecoin governance.
This requires collaboration across central banks, finance ministries, securities regulators, financial intelligence centres, payment system operators, banks and fintechs. It also requires regional coordination. Stablecoins are inherently cross-border. A fragmented country-by-country approach will leave gaps that bad actors can exploit and innovators will struggle to navigate.
There is also a role for sandboxes, controlled pilots and supervisory learning environments. These can help regulators observe real use cases, understand risks, test reporting requirements, and design rules based on evidence rather than assumption.
The objective should not be to copy and paste regulation from elsewhere.
The objective should be to build African regulatory intelligence.
That means asking harder questions:
What problem is the stablecoin use case solving?
Who holds the reserves?
Where are the reserves located?
Who has redemption rights?
What happens in a stress event?
Which regulator has supervisory authority?
How are AML/CFT obligations enforced?
How are consumers protected?
How does the product interact with domestic payment systems?
Could it affect monetary sovereignty or financial stability at scale?
These are the questions that must shape the next phase of Africa’s digital finance policy conversation.
The roundtable reinforced my belief that the future of finance in Africa will not be built by innovators alone. It will also not be built by regulators alone. It will be built at the intersection of innovation, trust, policy, supervision and market reality.
Stablecoins may become part of the future of African finance. But if they do, they must be designed and governed in a way that strengthens—not weakens—our financial systems.
Innovation matters.
But in finance, trust is the real infrastructure.
And trust must be designed, regulated, supervised and protected.
