Nigeria’s crypto industry has a long memory, and it has earned one. In February 2021 the Central Bank of Nigeria ordered lenders to close the accounts of anyone dealing in cryptocurrency; eighteen months later it was piloting its own digital currency and courting the very industry it had just spent a year trying to strangle, a policy arc that would be comic if it hadn’t cost people their businesses. Binance, the exchange that absorbed much of the resulting informal trading volume, learned the cost of that inconsistency the hard way: in 2024 one of its compliance executives, Tigran Gambaryan, was detained in Nigeria for months amid a dispute over the naira’s value and unpaid tax claims, before being released. Nothing sharpens a company’s appetite for jurisdictional diversity quite like watching a colleague become collateral in a currency dispute.

That memory looks freshly justified. Ghana, South Africa, Nigeria, Kenya and Ethiopia have each, within the space of roughly a year, produced new rules aimed at taxing, restraining or, in Ethiopia’s case, simply pretending out of existence a technology that in some of these same countries is quietly propping up the remittance economy. Read individually, each rule is a defensible act of financial governance, delivered by officials who will insist, not unreasonably, that they are protecting citizens from an industry with a genuinely patchy record. Read together, they describe a continent-wide regulatory contraction arriving at precisely the moment global investors decided African stablecoin infrastructure was worth serious money — the sort of timing that would make a novelist blush and a compliance officer reach for a second passport of incorporation. The companies caught between those two facts are responding with a strategy that is, depending on which side of the meeting table one sits, either prudent risk management or a polite, well-funded vote of no confidence in the markets that made them: geographic diversification, executed at speed, into Latin America, Southeast Asia and the Gulf.

The compliance obstacle course

The details of the crackdown are worth sitting with, because “regulators are cracking down” tells a reader nothing, and because each rule, taken on its own terms, is more coherent than the pattern it belongs to.

Kenya’s new Virtual Asset Service Providers Regulations now require a stablecoin issuer to hold roughly $2.3m in paid-up capital, park at least 30 per cent of token-sale proceeds in a trust account at a Kenyan bank, and invest the remainder in short-dated government paper. Translated out of statute-speak: every licensed Kenyan stablecoin issuer becomes, structurally, a captive depositor of the domestic banking system it was arguably founded to make redundant. The banks did not write this rule, but they will not be sending it back either.

Nigeria’s Revenue Service, rather than pricing crypto firms out of the country, has opted for the subtler pleasure of taxing them into submission: a 1.5 per cent stamp duty on every naira-to-token conversion, withheld in the token itself and remitted to a government “token treasury” whose custody, security and audit arrangements the circular does not get around to specifying — an admirably confident silence for a document instructing private companies to hand over volatile digital assets to the state. On top of that sits a 7.5 per cent VAT on exchange and custody fees. It is, credit where due, a technically literate piece of drafting from officials who clearly understand the difference between a stablecoin and a speculative token, which is more than can be said for some of the industry they are now taxing.

Ethiopia’s central bank has recently dispensed with such nuance altogether, making the mere private safekeeping of a crypto wallet illegal. This is a rule with precisely no enforcement mechanism against a memorised twelve-word recovery phrase, and precisely one very useful function: handing the state a standing legal basis to act against anyone holding one, whenever it becomes convenient to do so. 

And then there is South Africa, which has proposed banning companies — though pointedly not individuals, who keep a R2m annual allowance — from moving stablecoins across borders at all. This arrives four months after Pretoria dismantled a 60-year-old, apartheid-era exchange control regime in the name of liberalisation, which is a striking pair of positions to hold in the same calendar year. Reserve Bank governor Lesetja Kganyago’s defence — that the country cannot run weak crypto rules alongside a rigorous system of reporting for everyone else — is genuinely coherent as policy logic. It is simply also the case that Absa, South Africa’s largest bank, has described the corporate ban as something that would “naturally limit immediate opportunities,” which is the sound of an incumbent expressing polite regret about a rule that inconveniences precisely nobody it employs.

This is not the industry’s first brush with that lesson. In 2023, Pillow, a Singapore-based crypto savings app that had raised $21m, cited “regulatory friction” and exited every African market it served — Nigeria and Ghana — within months, a retreat so complete it barely qualifies as a hedge. The difference this time is that the companies with the most to lose are not leaving. They are spreading the same African business across more jurisdictions, on the theory that no single regulator’s Tuesday-afternoon notice should be able to end it.

A different animal, on paper

Part of what lets today’s stablecoin infrastructure firms diversify rather than flee is that they can point to something the previous crypto wave mostly couldn’t: revenue. They are not selling speculative tokens or the promise of decentralised utopia; they are selling settlement — the unglamorous business of moving dollars in and out of economies that structurally lack them, which turns out to be a service people will pay for whether or not they find blockchain philosophically interesting. 

NALA’s B2B arm, Rafiki, reported 80 per cent gross margins against 64 per cent on its consumer side, and grew transaction volume from zero to $1bn in eighteen months. Yellow Card says it has processed more than $10bn in cumulative transactions and holds licences across 22 jurisdictions. Flutterwave, which took on Ripple and Circle as strategic investors at a valuation of $3.2–3.3bn in June, has processed over $50bn since launch. Kenya’s HoneyCoin reports $150m in monthly volume across more than 350 enterprise clients. Whether those numbers survive contact with a harder regulatory cycle is untested, but on the figures the companies themselves are offering, this is a generation with balance sheets, not just decks.

That distinction is what makes the diversification look like strategy rather than flight. Mansa, the Dubai-based stablecoin credit-line provider, was built from day one to serve Africa, Latin America and Southeast Asia at once, so that a licensing shock in Lagos or Nairobi dilutes the business rather than deleting it. London-based Velocity, having raised $38m, is pursuing licences in Africa and Latin America in parallel, rather than treating one as a testing ground for the other. NALA now runs its holding company out of New York and holds more than ten regulatory licences worldwide, a corporate address that says rather more about where the lawyers are comfortable than where the customers actually live. And Yellow Card’s fresh $40m, backed by Standard Chartered’s venture arm and Sony’s innovation fund, is earmarked explicitly for Latin American and Asia-Pacific expansion — which is a polite way of saying the African-born company that made its name disintermediating banks is now taking Standard Chartered’s money to go be disruptive somewhere else.

How long can it last?

The obvious rejoinder is that diversification cures single-jurisdiction risk, not systemic risk, and it would be a mistake to mistake a wider net for a safety net. Europe’s Markets in Crypto-Assets regime has already cut off dozens of the world’s largest stablecoins from its market, a preview of what a hardening compliance regime does to liquidity once a bloc the size of the EU decides to write one properly. Nothing about Latin America or Southeast Asia guarantees a friendlier long-run posture than Nairobi’s or Pretoria’s. It guarantees, for now, a different one — and a diluted single point of failure, not an eliminated one.

There is also a quieter way this fails. A company spreads itself across five jurisdictions, meets the compliance bar adequately in none of them, and discovers that diversification without depth is just Pillow’s retreat, deferred and dressed up in a press release about global expansion. Running a stablecoin operation across Lagos, Nairobi, Dubai and São Paulo simultaneously is a considerably harder treasury and compliance problem than running one in Lagos alone, and the industry’s record of managing complexity under pressure is not, on the evidence of the past three years, spotless.

Both sides, to their credit, can make a coherent case for themselves. The regulators are responding to genuine, well-documented risks — capital flight, tax leakage, consumer harm — with tools that are, taken individually, proportionate to the concern, even when their timing suggests a right hand only loosely acquainted with the left. The companies are responding to genuine regulatory unpredictability by refusing to let any one government hold a veto over their survival, which is simply prudent, if occasionally narrated with more mission-statement grandeur than the underlying spreadsheet strictly requires. Neither party is being entirely candid about how much its own conduct shaped the other’s response. What is not yet answerable is whether this generation’s balance sheets are sturdy enough to run the harder version of the business it has chosen to build — and that will only be settled by the next regulatory notice, of which, on current form, there is reliably another one coming.