As the African crypto-currency industry navigates a pivotal period of growth, crypto providers will have to address critical challenges in order for the industry to succeed in 2025.
This is one of the key findings of the Sumsub State of the Crypto Industry 2025 report, which provides data and insights into the major trends, challenges and innovations shaping the crypto landscape.
It identifies three critical challenges African crypto providers faced in 2024 that should be addressed in 2025 in order for the industry to thrive: security threats, technology capabilities and regulation.
Crypto's rapid growth on the continent hinges on operational efficiency, as well as these issues being addressed, it says.
Globally, 60% of surveyed crypto companies foresee stricter regulations, while only 29% fully comply with the travel rule, it says.
The ‘travel rule’ is the term used to describe the application of the Financial Action Task Force's Recommendation 16 requirements regarding wire transfers or electronic funds transfers to crypto asset transfers.
According to the report, fraud in the crypto industry has soared by 48%, with document forgery constituting 31% of all detected fraud cases.
“Africa’s growing adoption of crypto provides its own challenges, but we foresee increasing demand and growing user expectations across the continent,” comments Hannes Bezuidenhout, VP of business development − Africa at Sumsub.
“So, it’s crucial for virtual asset service providers operating in the region to implement secure verification systems and stay vigilant to fraud, while keeping an eye on evolving and new regulations concerning the crypto sector to avoid fines.”
According to the report, 2024 was “a year of on-boarding” for crypto exchanges: crypto platforms experienced a 20% rise in traffic during major market events, such as the re-election of US president Donald Trump and Bitcoin rallies in November 2024.
In Africa, Nigeria recorded the highest rate of fraud across the crypto sector at 8.3% (of the overall) and showed a 75% average pass rate; the lowest among its regional African peers.
SA, Algeria, Ghana and Morocco were among the top 10 African countries in terms of speed of identification verification, with times of 20 seconds or less. Kenya trailed with times of 29 seconds, but showed increased verification speed for document-free verification at four seconds.
Ghana, Namibia, Kenya, Algeria, Morocco, Uganda, SA and Tunisia all showed pass rates above 90%, with Tanzania and Nigeria dipping lower.
Regulatory compliance
South Africa can expect to see some tightening of crypto regulations, as the country looks to table its Anti-Money Laundering and Combating Terrorism Financing Amendment Bill 2024, says Sumsub. This is expected to boost crypto uptake and further arouse interest.
The Financial Sector Conduct Authority last year initiated the process of approving operating licences for crypto-currency operators in SA.
Crypto companies that wanted to continue operating in the country were obligated to apply for a licence with the financial regulator from 1 June 2023.
Hundreds of applications have been received to date, with a fraction of these being awarded, it says.
Also, SA recently confirmed the enactment of the travel rule for crypto asset service providers, starting from April 2025.
Improvements increase traffic
Innovations like biometric checks, AI-backed automation and document-free identity verification have boosted crypto platform users’ on-boarding success rates to 93.39% and reduced verification time by 46%, overall improving customer on-boarding, while reducing drop-off cases.
The report notes that document-free verification has enhanced verification times in every country where it was implemented, with an average improvement of 3.6%.
The key user on-boarding issues crypto providers aim to mitigate through innovation include slow verification times, which impact 36% of surveyed companies, as well as false positives/negatives (48%). Furthermore, over half (55%) of companies reported dissatisfaction with the overall user experience on their crypto platforms.
“In Africa, non-document verification has significantly improved on-boarding speed. Nigeria leads the way with the fastest non-doc verification time at just three seconds, despite having the slowest document-based verification at 27 seconds.
“Similarly, Kenya processes non-doc verifications in four seconds, but lags with document-based verification at 29 seconds. South Africa, with an overall verification time of 20 seconds, shows room for improvement in document-free verification, which currently takes 11 seconds – significantly slower than its regional counterparts, yet much faster than document-based on-boarding.”
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