Nigeria is now the biggest player in cryptocurrency across Sub-Saharan Africa. It handled about $59 billion in crypto transactions from July 2023 to June 2024. This is nearly half of the region’s estimated $125 billion, according to a report by KPMG Nigeria and blockchain firm Chainalysis.
This is surprising because the Central Bank of Nigeria (CBN) banned banks from dealing with cryptocurrency in 2021. But that hasn’t stopped Nigerians. Instead of using banks, people turned to other ways, like peer-to-peer (P2P) trading, to keep using crypto.
The report, Crypto Risk and Opportunities in Nigeria: A New Banking Paradigm says most Nigerians are not just investing in crypto; they’re actually using it for daily transactions. About 85% of the transactions were under $1 million, meaning people are using it for things like paying for goods and services.
Over the past few years, Nigeria’s crypto market has not been stable. In 2021, transactions were worth $47 billion, but they dropped slightly over the next two years. By 2024, things picked up again, with a 25% increase in crypto transactions. The report says this is partly because the value of the naira keeps dropping. People see crypto as a safer way to save money and send money quickly without dealing with high bank fees.
At first, the Nigerian government was strict about the ban. In 2022, the CBN fined six banks N1.31 billion for breaking the rules and allowing crypto transactions. But by December 2023, the government changed its approach.
The CBN allowed banks to work with licensed crypto companies, and the Nigerian Securities and Exchange Commission (SEC) started planning to tax crypto transactions. The SEC also wants to create more rules for crypto exchanges to make the industry safer and more controlled.
Moreover, crypto is popular in Nigeria because it is cheaper for sending money across borders. Many Nigerians work abroad and send money home, but traditional methods have high fees.
“The high costs associated with cross-border transactions via traditional finance channels may have driven many Nigerians to leverage crypto,” the report explains.
However, this also gives scammers opportunities. Scammers have taken advantage of the growing crypto market, making around $10 billion in 2024 alone. Experts say banks need to start using better tools, like blockchain analytics, to track and stop fraud.
Despite the challenges, crypto in Nigeria is not slowing down. Even with past restrictions, people continue to find ways to use it. As the government looks for ways to regulate the industry, the future of crypto in Nigeria is uncertain but definitely growing.
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