Nigerian crypto adoption continues to increase despite government crackdown. Crypto communities worldwide have found ways around government bans, and Nigeria is no exception.
Nigeria’s regulators tried to crack down on cryptocurrency. Now, a few months later, it’s clear their efforts haven’t worked. The nation is a prime example of how people will turn to crypto to cope with a struggling economy despite the prohibitive stance of the state.
Nigerian Naira-denominated bitcoin P2P trading also increased steadily in 2021, with Nigeria being the second largest market after United States for peer-to-peer BTC trading.
In February, the Central Bank of Nigeria ordered banks to identify persons and/or entities who were conducting transactions in crypto or running crypto exchanges and ensure that such accounts are closed immediately. But that ban didn’t stamp out bitcoin in Nigeria. Rather, the crypto community turned to peer-to-peer trades by sending payments directly.
Nigerian crypto has been consistently growing since 2020, which may be partially related to this year’s bull market. In May, Nigeria received $2.4 billion worth of crypto, compared with $684 million last December. The growing adoption of Bitcoin in Nigeria has helped Sub-Saharan Africa become the top region in terms of P2P volume, with the region posting a weekly volume of $ 18.8 million to beat America’s $ 18 million.
A confluence of political and economic crises has spurred local adoption of crypto, including social repression, currency controls, and soaring inflation.
Nigerian crypto versus the Government
The government crackdown also led to economic crackdown, with social organisations supporting protesters with food and medical aid quickly finding their bank accounts frozen. Amid the violence, protesters have increasingly turned to cryptocurrency in order to place their economic activity beyond the reach of the government.
The Nigerian government, and the Central Bank of Nigeria in particular, haven’t been openly hostile to crypto. Commenting on the controversial banking ban during a public event in March, Adamu Lamtek, the Central Bank of Nigeria deputy governor, said the regulator had never banned cryptocurrency activity in Nigeria altogether; rather, it only prohibited banking services for crypto businesses.
“I THINK ENDSARS IS LIKE THE KEY CATALYST IN SOME OF THESE DECISIONS THAT GOVERNMENT MAKES. IT WAS SCARY. THEY SAW, FOR EXAMPLE, THAT PEOPLE COULD DECIDE TO BYPASS GOVERNMENT STRUCTURES AND INSTITUTIONS TO MOBILIZE.Adewunmi Emoruwa
In February, the government banned licensed banks from processing cryptocurrency transactions in a bid to crack down on the adoption of digital assets. However, the steadily increasing Bitcoin P2P volumes in Nigeria suggest that the country’s growing crypto user base has largely been driven underground in an effort to gain access to crypto assets outside of government jurisdiction.
Marius Reitz, Africa Managing Director of crypto trading platform Luno, told the Guardian that Nigeria’s ban has only made cryptocurrency trading more difficult to monitor, saying:
“A LOT OF BUSINESS ACTIVITY HAS NOW BEEN TAKEN UNDERGROUND, WHICH MEANS THAT MANY NIGERIANS NOW DEPEND ON LESS SECURE AND TRANSPARENT OVER-THE-COUNTER CHANNELS, AS WELL AS TELEGRAM AND WHATSAPP GROUPS, WHERE PEOPLE TRADE DIRECTLY WITH EACH OTHER. “Marius Reitz
Despite the country’s hostility to decentralized crypto assets, Nigeria is currently exploring the development of its Central Bank Digital Currency (CBDC).
At the end of July, Nigeria’s central bank revealed its intention to start testing its CBDC from October 1 of this year.
But for some crypto firms, however, Nigerian crypto reality still remains tough.