By Ayo Yusuf
In spite of a ban imposed by the Central Bank of Nigeria, CBN, barring customers from trading in cryptocurrency, Nigeria’s crypto transaction volume grew to $56.7bn in the last one year.
According to Chainalysis, the American blockchain analysis firm that provides intelligence and risk management information on the industry, the figure shows a 9 percent year-over-year growth in Nigeria’s crypto economy.
The firm, which stated that the figure was a record of the transactions between July 2022 – June 2023, noted that the country’s crypto economy has continued to grow despite market turmoil in the space.
Analysts also noted that this is happening despite the strict CBN regulations which directs banks to block transactions in cryptocurrencies.
In April the apex bank imposed an N800m fine on three banks, Access Bank Plc, Stanbic IBTC, and the United Bank for Africa Plc, as part of efforts to ensure that the country’s banks implement an order to block trading in cryptocurrencies presumably because of the threat they posed to Nigeria’s financial system.
Accordingly, Access Bank was fined N500m for failure to close customers’ crypto accounts, UBA incurred a N100m penalty for digital-currency transactions by a customer and as the Chief Executive Officer, Stanbic IBTC, Wole Adeniyi, confirmed during an investor conference this year, his bank was fined N200m ($478,595) for two accounts alleged to have been used for crypto transactions.
In addition, the CBN had in November directed banks to close the accounts of two individuals and a company for allegedly trading in cryptocurrencies.
However, despite these penalties, Nigeria still accounts for the largest volume of cryptocurrency transactions outside the United States, according to Paxful, a Bitcoin marketplace.
The country also has the largest proportion of retail users conducting crypto transactions under $10,000, Chainalysis says.
The blockchain research firm said, “In fact, Nigeria is one of only six countries in the top 50 by size globally whose crypto transaction volume grew year-over-year in the time period we studied. Its growth rate of 9.0 per cent places it third among those six.”
According to the firm, Nigerians are adopting crypto to preserve the value of their savings against rising inflation and debt.
It continued, “The evidence suggests crypto is one solution to Nigeria’s economic challenges. Since 2016, Nigeria has suffered from two major recessions, fueled by an unstable political situation, the COVID-19 pandemic, and the collapse of oil prices.
“Consequently, Nigerians of all ages are facing high unemployment – more than 20 million people were looking for jobs in 2021 – and many are up and moving to other countries.”
Interest in Bitcoin and stable coins has generally risen as the Naira’s value has decreased, Chainalysis opined. The firm noted that while Sub-Saharan Africa had the smallest crypto market, Nigeria ranks as the second-highest country in the world in terms of crypto adoption.
It added, “Although Sub-Saharan Africa has consistently been one of the smallest cryptocurrency markets, a closer analysis reveals that crypto has penetrated key markets and become an important part of many residents’ day-to-day lives. As we’ll explore in more detail later, no country exemplifies this better than Nigeria, which ranks second overall on our Global Crypto Adoption Index and also leads the region in raw transaction volume.”
All these are happening despite the directive banning transactions in crypto as contained in a circular issued by the CBN in February 2021.
IBTC’s Adeniyi said most times banks lack the necessary technology to detect some of these transactions which passed through their systems.
He noted that the CBN was able to detect the relevant transactions using an “advanced capability” that Nigerian banks don’t have access to, and urged the apex bank to share the technology.
