This story first appeared in African business outlet Nairametrics.
Poundtoken, the first British-regulated GBP stablecoin issuer, today announced an exclusive partnership for Africa with cryptocurrency trading platform, Encryptus. The collaboration is designed to address local shortages in USD and GBP and facilitate international transfers for the African market.
The partnership will bring in liquidity for Kenyan Shilling, Nigerian Naira against GBPT. As the sole issuer of the GBPT stablecoin, Poundtoken enables consumers to trade on-chain and convert GBP to GBPT.
Due to the current shortage of USD in Africa, and with USD being the currency of choice for many cross-border transactions, businesses are pivoting their treasury management to cope, including using other currencies such as GBP and the EUR. A shortage of USD in Africa can have significant economic implications, such as limiting trade and investment opportunities and affecting the overall stability of the economy.
Mike Crosbie, Acting-CEO of poundtoken.io said:
“Poundtoken and Encryptus both recognise the need to build better bridges between the worlds of TradFi and digital assets by solving real issues present in the world today, and this partnership aims to do this by offering a service that will strengthen treasury operations and lower the cost of doing cross-border transactions for many businesses in Africa.”
Remittances have long played an important role in the economies of many African countries. In 2022, the World Bank estimated that remittance flows to Sub-Saharan Africa reached $53 billion, up by 5.2% on the previous year. Yet in the same year, the average cost of sending remittances to Africa was 7.8% compared to the global average of 6%.
The ability to convert relevant fiat to stablecoins provides an alternative solution to conduct transactions internationally for businesses in Africa and help reduce reliance on traditional banking rails that typically incur higher costs.
Encryptus, which is licensed in Europe as a VASP, has a network and geographical reach in Africa, Europe and the Middle East meaning it can facilitate crypto-fiat settlements seamlessly with bank wires. By serving as an over-the-counter desk to enable the issuance and withdrawal of GBPT as needed, the partnership is a showcase of the real-world use case of stablecoins towards an economic reality of our times and relieves a key pain point for businesses.
Shantnoo Saxsena, CEO of Encryptus said:
“GBP is currently the fourth most-traded currency in the foreign exchange market. With major African nations struggling to source USD; the demand for GBP is growing by the day. The introduction of a GBPT to the local African markets will help to fill this gap. Users will be able to easily send remittances back home and international trade settlements will be facilitated far more effectively.”