Last updated on July 21st, 2022 at 01:12 pm
Cryptocurrency Peer-To-Peer trading in Nigeria continues to surge. And of course, that has impacted the exchange rate on popular P2P platform in Nigeria.
At the time of publication, a US dollar is worth between NGN590 to NGN591 on Binance P2P platform.
What does this mean?
It means a crypto buyer willing to bitcoin or any other crypto assets worth $100 will spend at least NGN59,000
It also means the P2P exchange rate in Nigeria is reacting to the blackmarket rate, even more, expensive than the blackmarket rate.
At the time of this report, the blackmarket rate is between NGN570 to NGN580, according to the rate shared by some buyers and sellers on ngrate, a leading forex forum in Nigeria while buyers would spend more when purchasing USD at the forex exchange market.
In February of 2021, the Central Bank of Nigeria (CBN) directed financial institutions from funding crypto-related accounts of their customers.
Is CBN Ban Having Any Effect?
The action of Godwin Emefiele-led apex bank made the crypto community in Nigeria opt for P2P for trading while several P2P platforms came into the limelight.
The CBN realising that its anti-crypto policy might not affect traders, the bank tracked some of the financial institutions suspected to have violated the directives
It, therefore, slammed heavy sanctions on banks, some of them paid heavy fines, amounting to NGN1.314 billion, according to TheCable, Nigeria’s leading online news platform.
The banks that were fined by CBN because of crypto-trading violations include:
- Stanbic IBTC: NGN200 Million
- First City Monument Bank (FCMB): NGN400 Million
- Access Bank: NGN500 Million
- Wema Bank: NGN100 Million
- United Bank for Africa (UBA): NGN100 million
- Fidelity Bank: NGN14.28 million
Recalled that the apex bank took some anti-masses direction in 2021 – ban crypto trading in February, stopped the funding of Bureau De Change (BDCs) in August which triggered a domino effect on the forex market and on the crypto market.
Despite the Central Bank of Nigeria’s restriction on cryptocurrencies-related transactions in the banking sector, a report by a crypto platform has said about 33.4 million Nigerians trade or own crypto assets.
In a report titled, “Into The Cryptoverse: Decoding The World Of Crypto Consumers”, by KuCoin, Nigeria’s youth is the “decisive force behind the surge in bitcoin searches.”
KuCoin is a crypto exchange that has over 10 million registered users globally.
It revealed that its early 2022 survey revealed that 33.4 million Nigerians “aged 18 to 60, currently own or have traded cryptocurrencies over the past six months.”
It further revealed that 70 per cent of crypto investors in Nigeria will most likely increase their cryptocurrency assets.
Why Nigerians are buying crypto
The devaluation of naira, the uncertainties in the economy of Nigeria, unstable economic policies, and insecurity are some of the reasons why the naira continues to lose value against its major competitors in the international market.
As such, some Nigerians see the financial opportunity brought by Bitcoin and other cryptos to keep the value of their money.
Though crypto is one of the most volatile currencies in the world.
In 2021, a report by Chainalysis, revealed that the crypto market in Nigeria and other African countries grew by 1200 per cent.
Chainalysis which is a blockchain data platform stated that Nigeria is the sixth leading country in the world in terms of cryptocurrency adoption as a result of acceptance of peer-to-peer platforms after CBN hammer.
The report also revealed that Africa has the third-fastest growing cryptocurrency economy in the world with Kenya, Nigeria, South Africa, and Tanzania leading the group in grassroots crypto adoption.
The CBN in an effort to create an alternative for Nigerians jumped on creating Nigeria’s Central Bank Digital Currency dubbed eNaira.
eNaira backed by blockchain technology – the same technology that backed cryptocurrency – is a digital currency that has the same value as the currency’s fiat currency naira.
The project received huge publicity, but its usage among Nigerians remains low. A lot of people who downloaded the eNaira on app stores said they deleted it because it failed to meet their expectations.
Government officials including the Minister of State Budget and National Planning, Clem Agba, submitted during a workshop that crypto should be regulated rather than banned, saying blockchain has tones of benefits it could add to Nigeria’s economy.
Similarly, the minister of Communications and Digital Economy Dr Isa Pantami recently said that blockchain technology could be deployed in Nigeria’s higher institutions.
Note: P2P exchange rate isn’t stable. It reacts to demand and supply and market reality in the parallel market.
Will the CBN reconsider the ban on cryptocurrency in Nigeria?