Nigerians traded N77.75bn ($185m) Bitcoin in the first three months of the year despite all efforts made by the Central Bank of Nigeria’s (CBN) to restrict cryptocurrency transactions in the country.
This is a 5.71 per cent increase from the N73.54bn worth of Bitcoin that was traded in the corresponding period of 2021, according to data made available to our correspondent by Paxful, one of the major peer-to-peer cryptocurrency platforms in the nation.
Trade from Nigeria accounted for 25.87 per cent of the total N300.48bn ($715m) worth of Bitcoin that was traded on the platform in the quarter under review. Global trade on the platform showed an 8.33 per cent increase from the N277.377bn ($660m) that was traded on it in the corresponding period of 2021.
According to the firm, Nigeria was its largest trading country in 2021 with 16,000 daily trades. In the period under review, the market cap of BTC dropped by $36.90bn from $902.10bn as of January 1, 2022, to $865.20bn as of March 31, 2022.
This was despite the CBN’s restrictions on cryptocurrencies in the nation. In February of 2021, the CBN asked banks in the nation to stop transacting in and with entities dealing in crypto assets.
The bank said, “Further to earlier regulatory directives on the subject, the bank hereby wishes to remind regulated institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.”
Since the restriction, P2P trading of crypto, especially BTC, has increased. According to a 2021 report by Chainalysis, the nation is the sixth leading nation in the world in terms of crypto adoption. A recent report by KuCoin, a crypto exchange with over 10 million registered users, disclosed that about 33.4 million Nigerians trade or own crypto assets.
According to the Founder and Coordinator, of Blockchain Nigeria User Group, Chimezie Chuta, the P2P nature of BTC is the cause of its increasing adoption in the nation.
He said, “Crypto is designed to be P2P and the only way we started talking about bank accounts is for easy offloads or what we call unwrap.
“If people are confident, or comfortable with just exchanging crypto to crypto in the P2P environment, then there is nothing that can stop it. And that is what happened after the CBN banned crypto and most of the trading went to P2P. P2P is person to person, there is nothing that can happen to that.
“So, what happens is you send people funds to their local accounts when you exchange whatever you need to exchange on the digital platform. It is expected because it is decentralised and disruptive enough to allow such things to happen.”
Chuta added that the recent downturn in the prices of the BTC and the crypto market was creating an opportunity for traders to make a profit.
The President of Stakeholders in Blockchain Technology Association of Nigeria and General Secretary of Blockchain Industry Coordinating Committee of Nigeria, Senator Ihenyen, stated that it was time for the CBN to rethink its stance on crypto.
He had said, “Yes, I strongly believe that it is time the CBN rethinks its stance on crypto in Nigeria. No doubt that the CBN must have had compelling reasons for shutting out cryptocurrency in the country’s banking and financial system in February 2021.
“But 15 months later, all stakeholders, including the CBN, must have benefitted from seeing the facts and figures of cryptocurrency adoption as well as the risks and opportunities. Today we know that less than 1 per cent of cryptocurrency transactions are linked with illicit transactions.
“Today we know that our law enforcement agencies need more transparency to aid their investigations, not the currency blackout in the space. Today we know that crypto exchanges such as Binance, Luno, Bundle, and the rest of them are the centralised gateway to the crypto world that should be accommodated as allied partners to CBN and other regulators.”
He added that the nation was safer with cryptocurrencies regulated than resisted as innovators believe it is the future of finance.