Nigeria is one of the few nations of the world where crypto is booming despite its ban by the government.
Crypto communities worldwide have found ways around government ban. Nigerians are not left out as they have not only found a way out but also made crypto big.
The Central Bank of Nigeria (CBN), had earlier sent shivers down the spine of crypto traders in the country. The statement released by CBN appeared to be a ban on the use of crypto in the country.
However, instead of a perceived end to crypto, the ban has being a means for it to bloom and flourish.
On this article, we are focusing on why crypto is booming in Nigeria despite its ban. Before then, let’s see the reason for the ban.
Why Crypto Ban In Nigeria?
In February 2021, the CBN released a statement in regards to crypto. Financial institutions were ordered to stop facilitating crypto transactions and desist from transacting with entities engaging in crypto.
The financial institutions were also instructed to close accounts of individuals or entities engaging in this type of transaction.The CBN also warned that breaches of the directive will attract severe regulatory sanctions.
This got Nigeria’s Security & Exchange Commission (SEC) to put hold it’s earlier plan to regulate crypto.
The order also sparked a lot of reactions from the public. This include rumours of ban due to crypto’s impact during the ENDSARS movement, that shook the government.
To clarify things, the CBN, however explained in a press on February 7, the reason for the earlier statement. According to CBN, the circular was just to enforce the regulation that all banks should not involve in crypto trades.
In conclusion, CBN was not comfortable with crypto. It’s ban was said to be a means to protect the financial sector from cybercriminals.
However, things have taken a different turn because, despite the ban, crypto has continued to boom. According to a report on crypto adoption around the world by Chainalysis in 2020, Nigeria is ranked 8th in the world.
Why Is Crypto Booming In Nigeria Despite Ban?
The ban on crypto has only limited the operations of traditional/centralized exchanges in Nigeria. Other ways of making transactions by crypto traders/investors have since been found.
One of the solutions to the ban is the peer-to-peer exchanges. Nigerians have turned to P2P exchanges for crypto transaction just as they use VPN for the banned Twitter app.
The ban was supposed to limit the number of crypto transactions and affect its growth. It has however been a blessing in disguise. Nigerians make use of exchange platforms such as Prestmit.
On P2P, you don’t buy crypto with the naira directly from the exchange but you buy from another person. The peer-to-peer exchange only serves as a place where buyers & sellers meet. In this case, a buyer transfers worth of crypto he/she wants to buy directly to the seller’s bank account.
No financial institution is needed to make this transaction. The peer-to-peer traders are difficult for the regulatory bodies to trace and shutdown or fish out their accounts.
According to several research in the crypto industry, Nigerians have sent more bank wires purchasing crypto. This came to be after the government ban.
Another solution is that cross-border transactions cannot be hindered. A lot of people in the country have turned to bitcoin for foreign transactions.
The ban does not affect the use of crypto for inter-border transfer so far it isn’t facilitated by a financial institution. Even before the ban, cross-border transactions have been one of the advantages of crypto over the naira. Therefore, the ban has had little or no effect on it.
Crypto has continued to thrive as a lot of Nigerians use crypto to hedge against inflation as naira continues to lose its value. Crypto traders and investors has continued to find ways to buy bitcoin and other cryptocurrencies in Nigeria.
Prestmit is a platform designed for you to trade, buy and sell various digital assets in Nigeria. This include gift cards, bitcoins, USDT, litecoins, dogecoins, airtime and data topup. Using Naira, Cedis, Bitcoin & USDT as payment options.