Why peer-to-peer crypto markets are growing — and why regulating them is becoming increasingly difficult

A buyer wants to purchase USDT.

A seller is willing to provide it.

They agree on a price.

The buyer sends local currency.

The seller releases the crypto.

No bank necessarily needs to process the transaction.

No traditional payment intermediary necessarily sits between the two parties.

And in some cases, the transaction can ultimately take place between two private wallets.

This is peer-to-peer (P2P) crypto trading.

For millions of users, particularly in markets where access to international payment infrastructure, foreign currency or traditional financial services can be difficult, P2P crypto can provide a practical alternative.

But for AML professionals and regulators, P2P creates a fundamental challenge:

How do you supervise financial activity when the transaction can occur without a regulated intermediary?

That question is becoming increasingly important across Africa.

Africa’s crypto market is not simply speculative

It is easy to describe cryptocurrency adoption in Africa through the lens of investment and speculation.

The reality is considerably more complex.

Crypto can be used for:

Remittances;
Cross-border payments;
International trade;
Savings;
Inflation hedging;
Access to foreign currency;
Digital commerce;
Investment;
Peer-to-peer transfers.

Chainalysis estimates that Sub-Saharan Africa received more than $205 billion in on-chain cryptocurrency value between July 2024 and June 2025, representing approximately 52% year-on-year growth. The region also showed particularly strong retail activity, with a larger share of transfers below $10,000 than in other regions.

Nigeria alone received more than $92 billion during that period, according to Chainalysis, making it by far the largest crypto economy in Sub-Saharan Africa.

This matters because P2P crypto activity is not occurring in a vacuum.

It is increasingly embedded within real economic activity.

Why P2P crypto is particularly attractive in Africa

One reason is simple:

Access.

Traditional financial infrastructure does not always provide an easy route between local currencies and global digital assets.

Businesses may experience difficulties accessing foreign currency.

Individuals may face restrictions on international transfers.

Cross-border payments can be expensive or slow.

Some customers may not have access to international cards or banking products.

P2P markets can provide an alternative.

Historically, research from Chainalysis has highlighted that African users have relied heavily on P2P platforms, including for remittances and commercial transactions. It also noted that informal P2P trading has occurred through messaging applications and private groups rather than conventional platforms.

That last point is particularly important for AML.

Because once trading moves outside a formal platform, visibility becomes much more difficult.

The regulatory problem: who is actually responsible?

Consider a simple transaction:

Buyer → Seller

The buyer pays local currency.

The seller sends USDT.

If both parties interact through a regulated exchange, the platform may have:

Customer identification data;
Transaction records;
Device information;
IP information;
Wallet addresses;
Counterparty information;
Payment information;
Suspicious transaction monitoring.

But imagine the same transaction taking place through:

WhatsApp → Bank transfer → Personal wallet → Personal wallet

There may be no regulated VASP directly involved in the transaction.

This creates what regulators increasingly need to consider as a visibility gap.

The blockchain may be transparent.

But the identities behind the wallets may not be.

And knowing that wallet A transferred USDT to wallet B does not automatically tell investigators:

Who owns wallet A?

Who owns wallet B?

Why was the transaction made?

What was the source of the fiat currency?

What was the economic purpose?

FATF is paying increasing attention to P2P activity

This is no longer simply a theoretical regulatory concern.

In March 2026, FATF published a targeted report on stablecoins, unhosted wallets and peer-to-peer transactions.

FATF specifically highlighted the risk associated with P2P transactions involving unhosted wallets because they can occur directly between individuals or entities without a regulated VASP or financial institution acting as intermediary.

FATF also noted the rapid growth of stablecoins.

More than 250 stablecoins were reportedly in circulation by mid-2025, with total market capitalisation exceeding $300 billion. FATF cited Chainalysis data indicating that stablecoins represented 84% of illicit virtual-asset transaction volume in 2025.

The implication for African regulators is significant.

Stablecoins can provide legitimate utility.

But the same characteristics that make them useful — liquidity, speed and interoperability — can also make them attractive to criminals.

P2P does not automatically mean illicit

This distinction is critical.

A P2P transaction is not inherently suspicious.

Someone buying USDT from another individual could simply be:

Saving against inflation;
Paying an overseas supplier;
Sending money to family;
Receiving a remittance;
Converting local currency;
Purchasing crypto as an investment.

A risk-based AML framework therefore cannot simply say:

P2P = high risk = suspicious.

That would be both impractical and potentially damaging to legitimate financial inclusion.

The challenge is identifying when legitimate P2P activity becomes a vehicle for:

Fraud;
Money laundering;
Sanctions evasion;
Terrorist financing;
Scam proceeds;
Cybercrime;
Tax evasion;
Other illicit financial activity.

The P2P trader can also become an intermediary

An interesting AML risk emerges when an individual stops behaving like a normal retail customer.

Consider a trader who:

Receives hundreds of fiat payments;
Purchases stablecoins;
Sends crypto to numerous unrelated wallets;
Uses multiple bank accounts;
Operates through different platforms;
Regularly buys and sells crypto at high velocity.

The individual may legitimately be operating a P2P business.

But they may also be acting as an informal financial intermediary.

This raises questions around:

Source of funds

Where does the fiat currency originate?

Source of wealth

How was the trader’s capital accumulated?

Economic purpose

Why are the transactions taking place?

Counterparties

Who are the buyers and sellers?

Volume

Is the activity consistent with the customer’s profile?

Network

Are multiple apparently unrelated accounts connected?

The mule-account problem

P2P markets can also intersect with traditional financial crime.

Imagine a fraudster steals £10,000.

Instead of sending it directly to a known criminal wallet, the fraudster sends the money to several bank accounts belonging to individuals.

Those individuals then purchase stablecoins through P2P transactions.

The crypto is transferred to wallets controlled by the criminal organisation.

The structure becomes:

Victim → Mule accounts → P2P trader → Stablecoin → Criminal wallet

The crypto transaction may appear perfectly normal on-chain.

The criminality occurred partly in the fiat layer.

This is why blockchain analytics alone is not enough.

Investigators need to connect:

Fiat activity + identity + P2P activity + blockchain activity.

Africa’s informal economy makes the challenge harder

AML frameworks are often designed around formal financial institutions.

But African economies contain large informal sectors.

An individual may legitimately:

Receive cash from customers;
Run a small trading business;
Receive payments from multiple people;
Send money across borders;
Operate without traditional payroll documentation;
Use several payment channels.

Now introduce crypto.

The same person may:

Receive mobile money → Buy USDT → Transfer USDT abroad → Receive local currency → Pay suppliers.

Is this money laundering?

Not necessarily.

It could simply be the way the business operates.

This is why regulators must avoid importing assumptions from highly formalised financial markets without considering local economic realities.

The danger of over-regulation

There is another side to the debate.

If regulators make formal crypto platforms extremely difficult to access, users do not necessarily stop using crypto.

They may simply move elsewhere.

Activity could migrate from:

Regulated exchange

to:

P2P platform

and potentially from:

P2P platform

to:

Private WhatsApp or Telegram group

and ultimately:

Wallet-to-wallet transactions.

This could make the activity less visible, rather than eliminating it.

The regulatory objective should therefore not simply be:

“How do we stop P2P?”

It should be:

“How do we understand and manage the risks created by P2P?”

Africa’s regulatory landscape is evolving

Several African jurisdictions are moving toward more formal crypto regulation.

South Africa has developed one of the continent’s more advanced regulatory frameworks, with crypto assets treated as financial products and a growing population of licensed crypto-asset service providers. Travel Rule obligations also became operational in 2025.

Nigeria has also moved toward a more structured regulatory model, with the 2025 Investment and Securities Act providing a framework for crypto assets and VASP supervision under the SEC.

Kenya has similarly been developing its virtual-asset regulatory framework.

And in 2026, South Africa proposed further rules covering cross-border crypto transfers, including transfers from local authorised providers to offshore entities or non-custodial wallets.

Zimbabwe has also introduced registration requirements for cryptocurrency businesses, representing another move toward formal oversight of a market that had historically been heavily P2P.

The direction is clear:

African regulators are moving from uncertainty toward supervision.

But P2P remains one of the hardest parts of that transition.

What should regulators actually monitor?

The answer is not simply more transaction thresholds.

Regulators and financial institutions should increasingly look at behavioural patterns.

Potential indicators include:

1. Rapid fiat-to-crypto conversion

Large or repeated fiat deposits followed shortly by crypto purchases.

2. Multiple unrelated counterparties

Large numbers of apparently unrelated people sending money to the same account.

3. High transaction velocity

Rapid purchases and sales inconsistent with the customer’s expected profile.

4. Repeated use of the same wallets

Multiple customers repeatedly interacting with the same blockchain addresses.

5. Multiple banking relationships

Several unrelated bank accounts apparently controlled by the same individual or network.

6. Geographic inconsistencies

Transactions involving jurisdictions unrelated to the customer’s known economic activity.

7. Cash-intensive funding

Significant cash deposits followed by crypto purchases.

8. Third-party payments

Someone repeatedly paying for crypto on behalf of other individuals.

9. Exposure to known illicit addresses

Wallets connected to scams, ransomware, darknet markets or other illicit activity.

10. Sudden behavioural changes

A previously inactive customer suddenly becoming a high-volume P2P trader.

None of these indicators proves criminal activity.

But combinations can justify enhanced review.

Blockchain transparency is an opportunity

There is an important misconception that crypto is completely anonymous.

Most major blockchains are actually highly transparent.

Transactions can be observed.

Wallet relationships can be mapped.

Funds can be traced.

Clusters can be identified.

Chainalysis has demonstrated how blockchain analytics can help investigators follow stolen funds across bridges, exchanges and other infrastructure. In one Nigerian case involving a large CBEC scam, its analysis identified more than $300 million in USDT associated with victims and traced the subsequent movement toward off-ramps.

The challenge is therefore not necessarily:

“Can we see the transaction?”

It is:

“Can we connect the blockchain address to the real-world person, business or criminal network?”

That is where blockchain intelligence needs to be combined with off-chain information.

The future of P2P AML will be hybrid

Effective supervision will probably require several layers.

VASP controls

Regulated platforms should maintain appropriate:

KYC;
Transaction monitoring;
Suspicious transaction reporting;
Record keeping;
Travel Rule compliance.

FATF’s standards require VASPs to apply preventive measures comparable to those used by financial institutions, including customer due diligence, record keeping and suspicious transaction reporting.

Blockchain analytics

Regulators and investigators can use blockchain intelligence to identify:

Wallet clusters;
Exposure to illicit addresses;
Rapid movement;
Cross-chain activity;
High-risk counterparties.

Fiat intelligence

Banks and payment providers can identify:

Mule accounts;
Unusual deposits;
Fraud proceeds;
Rapid fiat-to-crypto conversion.

Cross-sector cooperation

The strongest investigations may require information from:

Banks + VASPs + mobile money providers + telecom companies + law enforcement + regulators.

P2P networks do not respect institutional boundaries.

AML controls cannot either.

The real regulatory question

The debate should not be:

“Should Africa allow P2P crypto trading?”

That question is too simplistic.

The more important question is:

“How can African regulators preserve legitimate access to digital assets while preventing P2P infrastructure from becoming an invisible layer for financial crime?”

That requires proportionality.

It requires data.

It requires technology.

And perhaps most importantly, it requires regulators to understand why people use P2P crypto in the first place.

If P2P is providing access to remittances, foreign currency, savings and international commerce, simply pushing the activity underground may increase rather than reduce risk.

Final Thoughts

P2P crypto trading presents one of the most difficult AML challenges emerging from Africa’s digital financial ecosystem.

It sits at the intersection of:

Financial inclusion

Crypto adoption

Cross-border payments

Informal finance

Stablecoins

Fraud

Money laundering

and

Regulatory oversight.

The challenge is particularly difficult because the underlying activity can be completely legitimate.

A person buying USDT from another individual is not necessarily a money launderer.

A trader handling hundreds of transactions is not necessarily a criminal.

A wallet without a VASP intermediary is not automatically illicit.

But when P2P activity becomes connected to fraud, mule accounts, criminal wallets or unexplained sources of funds, regulators need the ability to identify those connections.

The future of crypto AML in Africa will therefore not be determined simply by how many exchanges regulators license.

It will depend on whether they can understand what happens outside the exchange.

Because the most difficult crypto transaction to monitor may be the one where no regulated intermediary is present.

And as P2P markets continue to evolve, regulators cannot afford to ignore the space between the regulated financial system and the blockchain.

The question is no longer whether P2P crypto exists in Africa.

It is whether regulators can make it visible enough to manage its risks without destroying the legitimate financial activity that made it valuable in the first place.

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P2P Crypto Trading in Africa: The AML Challenge Regulators Cannot Ignore