Although the Central bank of Nigeria (CBN) has banned cryptocurrency activities in Nigeria, there are reports suggesting that the usage of these currencies spiked astronomically last year.
Really, cryptocurrency usage in Nigeria is growing, as the economy grapples with a weakening currency and soaring inflation.
A New York-based blockchain research firm, Chainalysis, made this known in a report released on September 19.
This is coming on the heels of the Central Bank of Nigeria’s ban on banks allowing such transaction through the financial services provider in the country.
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Nigeria’s volume of crypto transactions grew 9% year-over-year to $56.7 billion between July 2022 and June 2023.
In Uganda, crypto use is smaller but growing fast, rising 245% to $1.6 billion in the same period, while its use in Kenya fell more than a half to $8.4 billion, the report said.
Chainalysis reports that in Nigeria, interest in bitcoin and stablecoins – crypto tokens whose monetary value is pegged to a stable asset to protect it from wild volatility, increased in Nigeria, when the Naira’s value plunged.
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The currency weakened after President Bola Tinubu embarked on some bold reforms Nigeria has seen in years, which includes scrapping petrol subsidy and removing some exchange rate restrictions.
Moyo Sodipo, co-founder of Nigeria-based cryptocurrency exchange Busha, in the statement shared with the report, said: “People are constantly looking for opportunities to hedge against the devaluation of the Naira and the persistent economic decline since COVID”.
Nigeria barred its banks and financial institutions from dealing in or facilitating transactions in cryptocurrencies in 2021.
Last year, the CBN published a set of regulation for digital assets, signalling Nigeria was trying to find a middle ground between an outright ban on crypto assets and their unregulated use.
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Nigeria’s young, tech-savvy population has eagerly adopted cryptocurrency, using the peer-to-peer trading offered by crypto exchanges to avoid the financial sector ban.
