UN Report: Over 13m Nigerians Hold Cryptocurrencies

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The United Nations Conference on Trade and Development (UNCTAD) has ranked Nigeria third among countries with the highest number of cryptocurrency holders in Africa, with 13 million Nigerians owning digital assets.

According to the most recent data from the UN agency’s policy brief, Nigeria lags behind Kenya and South Africa, with approximately 6.3% of the Nigerian population owning or holding cryptocurrencies.

In 2021, a little more than 13 million people in the country’s estimated population of 211 million owned digital currencies. According to the UNCTAD policy brief, Kenya has the highest proportion of cryptocurrency owners than any other African country, ahead of Nigeria and South Africa.

Kenya’s digital currency ownership of 8.5 percent as a share of the population was the highest in Africa and the fifth-highest globally. Only Ukraine (12.7 per cent), Russia (11.9 per cent), Venezuela (10.3 per cent), and Singapore (9.4 per cent) have a higher proportion of crypto-owning residents than Kenya globally.

In 2021, South Africa was the second-ranked country in Africa and eighth globally, with 7.1 percent of the population that owned or held cryptocurrencies. Although the Central Bank of Nigeria’s (CBN) restriction on banks to allow trading in cryptocurrency subsists, Nigeria is currently one of the biggest cryptocurrency markets globally.

Six Nigerian banks were reportedly fined N1.315 billion by the CBN in April for failing to comply with the apex bank’s directive prohibiting their customers from trading in cryptocurrencies. However, the Securities and Exchange Commission (SEC) recently released guidelines on the liberalisation of the cryptocurrency market.

Out of the 20 countries that were surveyed by UNCTAD in the latest policy brief, Australia was found to have the least percentage of its population (3.4 per cent) that owned cryptocurrency in the said period.

UNCTAD acknowledged that cryptocurrencies have grown in popularity because they are, “an attractive channel through which to send remittances.”

The United Nations agency also revealed that it found that middle-income individuals from inflation-hit developing countries own or hold cryptocurrencies because they are seen, “as a way to protect household savings.”

However, based on its findings, the UNCTAD stated that it determined that, “the use of cryptocurrencies may lead to financial instability risks,” adding that their use potentially opens “a new channel for illicit financial flows.”

The UNCTAD policy brief added: “Finally if left unchecked, cryptocurrencies may become a widespread means of payment and even replace domestic currencies unofficially (a process called crypto nation), which could jeopardise the monetary sovereignty of countries.

“The use of stablecoins poses the greatest risks in developing countries with unmet demand for reserve currencies.”

To minimise some of these risks, UNCTAD recommended the imposition of taxes that discourage crypto trading, including “the mandatory registration of crypto-exchanges and digital wallets.” The agency also recommended imposing “entry fees for crypto-exchanges” or levying taxes on cryptocurrency trading.

Doing this, it stated, would make the use of cryptocurrencies less attractive, even as he prescribed the restriction of cryptocurrency advertisements and the issuing of a central bank digital currency (CBDC).

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