The federal government of Nigeria banned the use of cryptocurrencies early last year and irrespective of this Nigerians, especially the young and tech-savvy population found a loophole in peer-to-peer transactions.
When it comes to trading volume across the world, Nigeria is one of the countries topping the chart globally. This means that even with a ban on cryptocurrencies in place, Nigerians still go about using cryptocurrencies for making payments, investing, remittances, etc. Even with the dwindling value of the naira, Nigerians are still very much interested in cryptocurrencies.
There are various reasons why people in countries such as Nigeria continue to use cryptocurrencies but the major reason is to protect themselves against the effects of a depreciating local currency and in Nigeria’s case, the naira. According to Chainanalysis, people in developing countries or emerging economies such as Nigeria use cryptocurrencies “to protect their funds against currency depreciation, send and receive remittances, and conduct business transactions.”
According to Paxful, Nigeria had over 16,000 daily transactions in 2021. More and more Nigerians are using cryptocurrency as an alternative means to store wealth, conduct business, and complete transactions.
Over the last six months, peer-to-peer transactions surged by 25 percent, according to reports. The country now has $219 million in peer-to-peer volumes on two of its most recognized peer-to-peer platforms – Paxful and Localbitcoins. Behind Nigeria, is Kenya with $92 million in peer-to-peer transaction volume and Ghana with $69 million in peer-to-peer transaction volume.
Although Nigeria’s central bank continues to ramp up efforts, the naira has continued to decline in value pushing people to hold and spend in other alternate forms like Bitcoin. Data from Statista shows that Nigeria is one of the African countries with the highest population using cryptocurrency. In the world, one of the highest searches about Bitcoin comes from Nigeria, according to Google Trends.
Nigeria’s Securities and Exchange Commission recently issued new rules on issuance, offering platforms, and custody of digital assets. The new regulations suggest that Nigeria’s market regulator is trying to find a standpoint on the outright ban of cryptocurrencies in the country and their continuous unregulated use. The “New Rules on Issuance, Offering Platforms and Custody of Digital Assets” is a 54-page document outlining registration requirements for digital assets offerings and custodians and classifies these assets as securities regulated by the SEC.
According to the Securities and Exchange Commission (SEC), no digital assets exchange platform will be allowed to provide asset trading services unless it has received a “no objection” ruling from the market regulator. Digital asset exchange platforms looking to provide trading services will be expected to pay a whopping sum of 30 million naira, among other fees required by the commission.