Instead of introducing cryptocurrency regulations, the Nigerian government, through its apex bank, issued an autocratic directive on February 5, 2021, instructing financial institutions to block all accounts involved in virtual currency transactions.
As a result, several accounts were frozen, and many individuals lost millions of Naira. However, the anti-crypto policy has failed to stamp out trading in Africa’s largest economy. Rather than diminishing, cryptocurrency trading has continued to thrive.
Here are 15 reasons why cryptocurrency remains popular in Nigeria despite the ban by the Central Bank of Nigeria (CBN).
1. Cheaper Remittances
The 2021 Statista Global Consumer Survey revealed that Nigerians were the most likely to own or use cryptocurrency among the 74 countries surveyed. Many Nigerians in the diaspora prefer using cryptocurrency for remittances due to the high fees imposed by financial institutions on fiat transactions.
This issue is not unique to Nigeria—sending money across African borders is generally costly. According to Bitcoin.com, cryptocurrency can reduce remittance costs in Africa by up to 90%.
The increasing popularity of trusted P2P platforms that support Nigerian users has made it easier and cheaper for people overseas to send money to their families and friends back home.
2. Crypto Exchanges Switching to P2P Platforms
Before the CBN ban, several crypto platforms allowed users to fund their wallets with debit cards. However, after the restriction, these platforms swiftly switched to peer-to-peer (P2P) trading.
P2P platforms serve as meeting points where buyers and sellers use an escrow service to complete transactions securely.
Since financial institutions can no longer facilitate crypto transactions, Nigerians have adapted by leveraging P2P services. Platforms like Binance, Remitano, LocalBitcoins, and Paxful have become increasingly popular, helping users bypass the usual bank charges previously associated with card transactions.
With P2P trading growing, cryptocurrency transactions remain difficult for banks and the CBN to track, ensuring that trading continues uninterrupted.
3. Frustration with Nigerian Banks
Many Nigerians have expressed dissatisfaction with banking services in the country. In a Facebook group discussion, members overwhelmingly shared negative experiences with their banks.
Another colleague narrated how her bank nearly frustrated her efforts to set up an SME account. Such issues are common, particularly when it comes to resolving disputes and handling excessive paperwork.
Cryptocurrency eliminates these bureaucratic challenges, making it an attractive alternative for young entrepreneurs seeking seamless international payments.
4. Easy International Trade
In September 2021, Coinbase, one of the world’s largest cryptocurrency exchanges, reported that hundreds of Nigerian importers use cryptocurrency to purchase goods from China, Nigeria’s major import partner.
According to Coinbase:
“Some Nigerians are using crypto to import goods — from China, for example — that can then be resold domestically. And Nigeria isn’t alone. Throughout sub-Saharan Africa, more than $80 million in bitcoin was sent via peer-to-peer exchanges in the last month, almost as much as was transferred in North America.”
The difficulty in accessing forex through official channels has pushed many importers to the parallel market, where exchange rates are higher. Crypto provides an alternative means of securing payments for international transactions.
5. Faster Cross-Border Transactions
Apart from the high costs, importers often experience long delays when trying to access forex through banks. Cryptocurrency eliminates these delays by enabling instant cross-border transactions.
Unlike bank transactions, which often require CBN approval, crypto transactions bypass these regulatory bottlenecks, making them a preferred choice between businesses across borders. There is no other secret as to why YellowCard has expanded to 20 countries across Africa in less than 10 years of its establishment than how it simplified croos-border transactions.
6. PayPal Verification Issues for Bloggers
PayPal is the most preferred payment method for foreign clients working with Nigerian bloggers. However, PayPal removed Nigeria from its list of supported countries for receiving payments, limiting Nigerian bloggers’ access to global opportunities.
While some bloggers have found ways around this restriction, they often encounter additional verification hurdles that require valid documentation.
With many foreign content agencies now willing to pay via Bitcoin, Ethereum, and other cryptocurrencies, Nigerian bloggers are increasingly adopting crypto for international transactions.
7. More Companies Accept Bitcoin
Research by Buy Bitcoin Worldwide indicates that a growing number of Nigerian companies now accept cryptocurrency as payment.
For instance, Gsm2me, an online platform that sells mobile airtime and SMS packages, allows customers to pay with Bitcoin.
8. Hedge Against Inflation
There is growing skepticism about the inflation statistics released by the National Bureau of Statistics (NBS), which many believe do not reflect the reality of rising prices.
Many financially literate Nigerians view cryptocurrency as a hedge against inflation. While they acknowledge the risks of crypto trading, they believe that their digital assets are better protected from inflation compared to holding naira.
9. More Profitable Than Bank Deposits
Poor monetary policies and the naira’s devaluation have caused prices of goods and services to soar. Meanwhile, bank deposits attract multiple charges, including card maintenance fees and SMS alerts.
Cryptocurrency investors, on the other hand, enjoy lower transaction costs and potentially high returns.
Michael Ugwu, a former banker and crypto investor, told BBC that he made 50 times his initial investment in cryptocurrency. He compared this to selling land he had held for years, realizing that the proceeds had little value when converted to USD.
10. Loss of Faith in Monetary Policy
Since 2015, Nigeria’s government has taken on more foreign debt than any administration since 1999. As of December 2020, external debt had risen from $7.3 billion to $28.57 billion.
The burden of servicing these debts has made monetary policies less effective, prompting many Nigerians to seek financial security in crypto assets.
11. A Step Ahead of Bureau De Change (BDC) Operators
On July 27, 2021, the CBN halted forex sales to Bureau De Change (BDC) operators due to alleged sharp practices.
Unlike BDC operators who face government restrictions, cryptocurrency traders operate 24/7 without regulatory interference, further driving crypto adoption in Nigeria.
12. Crypto Academies
Most P2P crypto platforms, including Yellow Card, Binance, Paxful, Remitano, and Quidax, have established educational programs to guide newcomers on crypto trading.
With video tutorials, user guides, and responsive customer support, these platforms are helping more Nigerians enter the crypto space.
13. Unstoppable Digital Currency
Traditional banks impose limits on international transactions, but cryptocurrency has no such restrictions.
The resilience of the crypto community, particularly after the CBN ban, proves that digital currency is unstoppable.
During the #EndSARS protests in 2020, organizers received Bitcoin donations after their bank accounts were blocked, further demonstrating the power of decentralized finance.
14. Escape from Financial Restrictions
In August 2020, Nigerian banks reduced the dollar spending limit on naira debit cards to $100 due to forex shortages. This restriction pushed many Nigerians to explore cryptocurrency as a means of accessing international services.
15. Free Coins by Remitano
In September 2021, Remitano, a global P2P crypto exchange, announced that registered users could mine free RENEC (Remitano Network Coin).
RENEC aims to improve transaction speed and reduce fees on the platform. Other exchanges may introduce similar incentives, further increasing crypto adoption in Nigeria.
Conclusion
By now, the Nigerian government should realize that cryptocurrency is here to stay. Instead of rigid anti-crypto policies, regulators should consider introducing clear guidelines to oversee the sector.
Restricting crypto trading in favor of the eNaira will not discourage enthusiasts from using decentralized currencies. The best path forward is regulation, not restriction.