The American cryptocurrency Coinbase has teamed up with the pan-African exchange Yellow Card to provide African customers with easier access to Coinbase’s offerings.
Despite Coinbase’s widespread use, African users can only send and receive cryptocurrency using its apps; they are unable to purchase or sell it.
Exchange of cryptocurrencies Coinbase and Africa’s Yellow Card have teamed together to bring its products to 20 more African nations, with an emphasis on boosting access to the USD Coin USDC $1.00 stablecoin.
With the support of Coinbase and Yellow Card goods “our new partnership […] will help usher in the future of money by giving millions of users access to USDC and fast, reliable, cheaper transactions on our decentralised, open L2 Base,” the company stated in a statement on January 11.
According to Mariblock, CEO of Yellow Card Chris Maurice, the deal basically implies Coinbases will use its rails to serve clients in Africa.
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“With [Yellow Card] YC powering the on/off ramps to/from African fiats across all 20 countries we currently support, if you’re a Nigerian using Coinbase Wallet and you want USDC, you’ll be able to on-ramp into it using NGN,” he stated in a chat with Mariblock.
The World Bank reports that cross-border transactions to Sub-Saharan Africa still come with high transaction costs, which average 8.4%.
The Coinbase-Yellow Card relationship is an additional effort to use cryptocurrency, which is still being recommended as a method for less expensive remittances, to provide Africans with accessible and inexpensive remittances.
The Bank of International Settlements (BIS) contends in a working paper from 2023 that a major obstacle to efficient cross-border payment systems is a lack of trust between the participants.
The group emphasised cryptocurrency-based and central bank digital currency (CBDC)-based solutions as potential fixes for these issues.
Similar to Coinbase, a number of cryptocurrency businesses have emerged throughout time to provide digital remittance services that usually do not require middlemen or third-party frameworks.
Many of these nations rely heavily on remittances and have high rates of inflation.
With its focus on USDC, this cooperation will improve the following areas: it will boost economic independence in areas where it hasn’t existed before and assist in establishing a modern financial system where none has before: savings that are shielded from the economic turbulence brought on by volatile currencies. Inflation in Africa is 18.5%.
Recent years have seen an increase in the use and ownership of cryptocurrencies in nations like as South Africa and Nigeria, where 22% and 47% of adults, respectively, owned or utilised cryptocurrencies in 2022.
Transfers of funds. Remittances are estimated by the World Bank to make up 20% or more of GDP in several poor nations.
By means of this collaboration, consumers will be able to avoid paying fiat transfer costs, which can range from 3% to 6%.
Maurice stated that Coinbase-supported cryptocurrencies and stablecoins will be included in addition to USDC.
The 20 nations that Yellow Card works in are listed on their website, including Nigeria, South Africa, Botswana, Ghana, Kenya, and Tanzania.
Coinbase hopes that the relationship with Yellow Card would provide a more financially sustainable means to transact in the region, given that many of these countries are remittance-dependent and have significant rates of inflation.
A number of these areas also require economic opportunities for populations that tend to be younger than normal, Coinbase continued, pointing out that the youngest continent is Africa “by far.”
Maurice is optimistic that the collaboration will facilitate trade for numerous Africans around the continent.
In a statement released on January 11, Maurice emphasised that “stablecoins like USDC solve real problems for real people & businesses on the continent.”
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Notably, the Central African Republic was the first nation in Africa to accept Bitcoin as legal cash. But this was short-lived since, only days after the Bitcoin law was passed, the government launched Sango Coin, a cryptocurrency token scheme.
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