Africa’s blockchain and crypto area is receiving a much-needed enterprise enhance throughout a troublesome time for startups, a few of which have retreated from particular markets or utterly shut down because of points like harsh regulatory atmosphere, macros or downright mismanagement.
The enhance includes Yellow Card, the U.S.-founded crypto platform launched in Nigeria in 2019, which has since turn out to be the continent’s most-funded cryptocurrency trade. The firm confirmed to TechCrunch that it has raised $33 million in Series C funding led by decade-old enterprise agency Blockchain Capital, whose bets embody Coinbase, Kraken, OpenSea, and, extra just lately, Worldcoin. This brings Yellow Card’s whole funding to not less than $88 million.
Blockchain Capital’s buy-in to Yellow Card comes because the crypto platform, which initially supplied retail clients entry to crypto, USDT, USDC, and PYUSD in 20 African international locations utilizing native currencies, is doubling down on its enterprise clients, a shift it began throughout its $40 million Series B fundraise two years in the past. (Yellow Card was valued at $200 million in that spherical; Maurice, with out disclosing specifics, says the crypto platform’s present valuation is “a major bump from the Series B.”)
“The huge shift for us has been our concentrate on working predominantly with companies now,” co-founder and CEO Chris Maurice advised TechCrunch. “When we began, we focused the B2C market to serve retail clients. However, we realized that the true customers who profit probably the most from this expertise are companies.”
Yellow Card served retail clients for the primary couple of years after its launch. However, the pivot got here when the corporate, which reached 1 million clients in 2021, in line with Maurice, started to note how extremely expensive it was to deal with retail customers on the platform. While any crypto buyer, no matter measurement, should undergo sanction screening, KYC, and chain evaluation screening, when it got here right down to volumes, the margins have been too skinny to make the enterprise sustainable with small retail customers. On the opposite hand, small to giant companies have been shifting extra vital volumes and paying larger fuel charges.
As a consequence, Yellow Card has raised its minimal transaction quantities, a deliberate measure to scale back its broad retail base and develop its attraction to companies utilizing the platform to handle treasury and entry stablecoins.
“Usage of our platform didn’t change — it was extra about our shift in focusing on and positioning,” answered Maurice when requested if Yellow Card’s description of itself from a cryptocurrency trade platform to a licensed stablecoin on/off ramp was a results of a change in how clients used the platform. “We’re now extra aligned with what our clients, notably companies, use us for, which is to handle treasury and entry stablecoins. That’s what led to the change in messaging.”
Move over B2C, companies are the brand new goal
Today, Yellow Card works with about 30,000 companies throughout Africa and internationally, serving to them with funds and treasury administration, primarily by means of stablecoins.
At first look, Yellow Card’s concentrate on companies might sound to deviate from its unique plan to make crypto accessible to the lots. However, Maurice argues that the eight-year-old firm continues to be steered in that path however goes about it otherwise.
First, he factors out that a person and a small enterprise will not be mutually unique in Africa; an instance is a person proudly owning a small kiosk. Hence why Yellow Card’s buyer base, regardless of the slight pivot, nonetheless ranges from a dealer promoting imported footwear to a few of the continent’s largest companies, and everybody in between. “The means enterprise and private use mix collectively on the continent creates a really totally different dynamic, making our method related for each teams,” mentioned the CEO.
Second, the corporate believes that serving companies means people may gain advantage extra from the expertise than they essentially do from straight interacting with it.
For occasion, through the use of Yellow Card for treasury administration, corporations that import meals, prescription drugs, and shopper items could make important objects extra reasonably priced and accessible, benefiting the broader inhabitants, even when people aren’t straight partaking with crypto. In different phrases, the common particular person positive factors extra from cheaper items and providers — made attainable by companies utilizing Yellow Card — than from utilizing the expertise themselves.
While Sub-Saharan Africa lags behind the remainder of the world in crypto quantity (accounting for below 3% of the entire transactions carried out between July 2023 and 2024), the area has extra sensible and compelling use circumstances for crypto than the West. Nigeria, as an illustration, has the second highest crypto adoption globally; Ethiopia, Kenya and South Africa are within the high 30, in line with a current report by Chainalysis‘.
Stablecoins, notably, have turn out to be the middle of utility in Africa’s crypto economic system. What’s the play? Most African international locations have extremely unstable native currencies and restricted entry to the U.S. greenback. So stablecoins, pegged to the greenback, akin to USDT and USDC, provide enterprise and retail clients a option to retailer worth by hedging in opposition to inflation and forex devaluation and facilitating worldwide funds and cross-border commerce.
Stablecoins utility driving adoption
Maurice says the utility of stablecoins and demand for its expertise from companies shifting bigger sums has contributed to Yellow Card’s transaction volumes surging from $1.7 billion early final yr to over $3 billion. As a consequence, the corporate’s income has elevated sevenfold since January 2023, now “nicely into eight figures.”
“What’s majorly driving adoption for us is utility. Stablecoins are helpful. People want them,” mentioned the CEO. “They clear up issues for folks and companies. People are adopting this expertise as a result of they want it. This just isn’t a hypothesis use case. It’s a utility use case.”
Yellow Card has two fundamental merchandise: the core on-and-off-ramp and the API suite, which Maurice, on the decision, playfully phrases “Africa-as-a-service.” The API suite integrates Africa’s banking and cellular cash infrastructure, makes it accessible to international corporations like Coinbase and Block, and permits them to on-and-off-ramp their clients on the continent utilizing Yellow Card’s rails.
No doubt, Yellow Card’s current financing validates the progress of stablecoins in Africa and its practicality globally. The firm will now look to faucet extra into the alternatives the expertise offers by enhancing its flagship product and API (which has a widget constructed on high of it.)
“The way forward for funds lies in quick, reasonably priced rails for everybody, powered by open networks,” mentioned Aleks Larsen, General Partner at Blockchain Capital. “We couldn’t be extra excited to again Yellow Card as they convey Africa on-chain with stablecoins.”
Yellow Card, which self-describes itself as the most important and first licensed stablecoin on/off ramp platform in Africa, mentioned Polychain Capital, Block, Inc., Winklevoss Capital, Third Prime Ventures, Castle Island Ventures, Galaxy Ventures, Blockchain Coinvestors, and Hutt Capital additionally invested within the Series C spherical.
It added that the funding can even permit it to develop new merchandise, strengthen its workforce and techniques, and proceed to guide engagement with regulators throughout the continent.
Regulation is the bane of crypto platforms’ existence globally. Companies like Binance and Coinbase are dealing with lawsuits for allegedly providing unregistered securities within the U.S. Meanwhile, crypto stays closely restricted in sure international locations, together with China, with continued crackdowns on mining and exchanges.
Separately, the current debacle between Binance and Nigeria — the nation has held one of many crypto platform’s executives, Tigran Gambaryan, for eight months over allegations that Binance was undermining its native forex — is one motive crypto platforms must maintain speaking with regulators.
With strict and fuzzy guidelines governing how folks use crypto in several markets, Maurice argues that African regulators have been way more modern and have a greater understanding of the expertise than different areas. He cites the current licensing tips in Nigeria, frameworks in international locations like South Africa, Botswana, Tanzania, and Zambia, and the introduction of a sandbox atmosphere in Ghana to help his level.
“Obviously, the purpose is that we proceed to see and develop clear regulatory frameworks globally. I believe Africa has an unfair popularity in relation to regulation. In actuality, it’s usually a way more crypto-friendly atmosphere than the U.S. proper now,” Maurice mentioned.
