NAIROBI – The Society for Worldwide Interbank Financial Telecommunication (SWIFT), the bedrock of international bank messaging for half a century, is facing an existential challenge from a technology that barely existed a decade ago: stablecoins. In a move widely seen as a defensive strategy, SWIFT is accelerating its exploration of blockchain technology, but on the ground in Kenya and across Africa, the disruption is already well underway, fueled by the superior speed and lower cost of digital currencies.

For decades, sending money across borders via SWIFT has been a slow and costly affair, often taking 1-5 business days and involving multiple intermediary banks that each charge a fee. The World Bank has consistently ranked Sub-Saharan Africa as the most expensive region for remittances. In contrast, stablecoins—digital tokens pegged to stable assets like the U.S. dollar—settle transactions in minutes, often for a fraction of the cost. Recent analysis shows stablecoin transfers can reduce remittance costs from an average of over 6% to under 1.5%. This efficiency is not theoretical; it is a daily reality for a growing number of Kenyan traders and families who use stablecoins for everything from paying international suppliers to receiving diaspora remittances.

SWIFT's Modernization vs. Blockchain's Revolution

SWIFT has not been idle. Its Global Payments Innovation (SWIFT gpi) initiative, launched in 2017, has already improved the speed and traceability of traditional bank transfers, with nearly all gpi payments credited within 24 hours and many within minutes. However, this is an upgrade to an existing system, not a reinvention. Recognizing the deeper, structural threat posed by blockchain, SWIFT has initiated more ambitious projects.

In September 2025, SWIFT announced it would add a blockchain-based shared ledger to its infrastructure, working with over 30 major financial institutions to enable real-time, 24/7 cross-border payments. Reports confirm that several banks in Africa are part of this initiative, though specific Kenyan bank participation remains unconfirmed. The project aims to make SWIFT's network compatible with digital assets, including stablecoins and tokenized deposits. This follows years of experiments, including successful pilots with firms like Chainlink to demonstrate that SWIFT can act as a single point of access to multiple blockchain networks, saving banks from costly individual integrations.

But critics argue that SWIFT’s core business model—acting as a messaging intermediary—is fundamentally threatened by a technology designed to eliminate intermediaries altogether. While SWIFT moves payment *instructions*, stablecoins move *value* directly on a shared, immutable ledger.

Kenya's Regulatory Embrace and Banks' Growing Interest

The Kenyan government and financial sector are actively responding to this new landscape. In October 2025, Kenya's Parliament passed the landmark Virtual Asset Service Providers (VASP) Bill. Signed into law on October 15, 2025, the Act establishes a formal regulatory framework, assigning the Central Bank of Kenya (CBK) responsibility for overseeing stablecoin issuers and payment providers, while the Capital Markets Authority (CMA) will supervise exchanges and other asset-related platforms. This move provides regulatory clarity that was previously a major barrier to institutional adoption.

This legislative step acknowledges a burgeoning reality. An International Monetary Fund report in January 2025 noted that Kenyans were already using stablecoins to handle international debts during U.S. dollar shortages and to hedge against local currency volatility. The new law is designed to mitigate risks like money laundering, which was a factor in the Financial Action Task Force (FATF) placing Kenya on its greylist in early 2024.

Kenyan banks are also signaling a significant shift. A 2024 Innovation Survey by the CBK revealed that 31% of commercial and microfinance banks are “highly likely” to engage in activities involving virtual assets. The banks cited the potential for faster transactions and lower costs as key opportunities, aligning with the demonstrated benefits of stablecoins. This marks a dramatic change from the CBK's 2015 circular that warned financial institutions against dealing in virtual currencies.

The Local Impact: A New Financial Ecosystem

The implications for Kenya are profound. For a nation where diaspora remittances are a primary source of foreign exchange, the efficiency of stablecoins offers tangible economic benefits. Furthermore, for the thousands of SMEs engaged in international trade, the ability to settle payments with a supplier in China instantly, rather than waiting days for a SWIFT transfer to clear, is a significant competitive advantage.

Payment giants are already capitalizing on this shift. Visa has partnered with Yellow Card, a pan-African crypto firm, to expand stablecoin-powered payments across the continent, including Kenya. This collaboration aims to use stablecoins to streamline treasury operations and enable more cost-effective money transfers.

While SWIFT's efforts to integrate blockchain are a necessary step toward modernization, the global financial messaging system is in a race against a technology that is already demonstrating its superiority in markets like Kenya. The question is no longer *if* blockchain will be part of the global financial system, but whether legacy players like SWIFT can adapt their fundamental role to remain relevant in a world where value can move without them.