Nigeria is the largest economic market in Africa. So, it goes without saying that anything looking to become a trend on the continent will need to do well in Nigeria.
The country has enjoyed a relatively friendly relationship with cryptocurrency. It quickly grew to become Africa’s largest crypto market, with many of its citizens using digital assets as a means of making payments and investing their money.
The Origins of the Problem
However, things took a turn for the worse in February when the Central Bank of Nigeria (CBN) announced that it would restrict all commercial banks in the country from having anything to do with cryptocurrencies. At the time, the banking regulator explained that cryptocurrencies carry significant risk to the sovereignty of the Nigerian Naira, and it would be better to curb these risks once and for all.
Since then, it has been a question of how the country has survived so far. Both local and foreign exchanges understand the importance of the Nigerian market, and many have come up with peer-to-peer trading systems that ensure that people can still carry out their transactions in one piece.
Nothing Has Changed
In what is now the four-month anniversary of the CBN’s crypto ban, it is beyond evident that the policy had little to no effect whatsoever. Exchanges and trading platforms were quick to adapt to the ban, and people have continued relating with cryptocurrencies as they used to.
Even fellow regulators pointed out that the ban wasn’t exactly productive. In April, Lamido Yuguda, the director-general of Nigeria’s Securities and Exchange Commission (SEC), explained that the CBN’s policy disrupted the country’s market.
According to local reports, the policymaker spoke at a press conference organized by the Capital Market Committee, explaining that the CBN’s directive put some of its own work in jeopardy.
The SEC has been working on a crypto regulatory framework since last September. By banning access to banking institutions, the CBN has made it impossible to dialogue with crypto industry leaders and find a possible path forward. Tuguda added that the suspension of the SEC’s crypto regulatory regime would remain until crypto exchanges can operate bank accounts in the country.
However, the SEC head also explained that the commission is working with the CBN to create an optimal regulatory regime for cryptocurrency operations in Nigeria.
To be fair, the CBN has explained that it isn’t against cryptocurrency operations in Nigeria. In March, Deputy Governor Edward Lamekek Adamu said that the bank didn’t ban Nigerian residents from buying or trading cryptocurrencies. Instead, it chose to protect its banking sector from the activities of digital assets.
“The CBN did not place restrictions from use of cryptocurrencies and we are not discouraging people from trading in it. What we have just done was to prohibit transactions on cryptocurrencies in the banking sector.”
Despite this stance, it goes without saying that there will need to be no restrictions on crypto before an agency like the SEC can move forward with progressive regulations. The CBN has now upended that.
Crypto Adoption Continues
As explained earlier, the crypto ban from the CBN has done little to change the public’s perception of digital assets. In fact, adoption seems to be on the rise, and several businesses dealing with the assets have seen boosts to their activities.
In April, George Residence - a top luxury hotel in Nigeria’s commercial capital of Lagos - announced that it would accept Bitcoin as a payment method and use the asset as its primary reserve currency. The organization, which offers luxury hotels and apartment suites, explained that it would make the move through a partnership with Coinvest Africa - a local crypto brokerage service.
Yanju George, the company’s chief executive, explained:
"We have allocated around 50% of our cash reserves to Bitcoin. [...] We hope to increase that as time goes on. Bitcoin is the currency of the future and it is only right that we are strongly positioned so we do not get left behind. Bitcoin permits our guests a faster and more secure way to enjoy the comfort we offer. Our residents desire simplicity, and we are excited to be able to offer that to them.”
Quidax, the largest crypto exchange in the country - and perhaps Africa - also announced a massive fundraising campaign last month. The company, which launched in 2018, has processed over $3.2 billion in transactions since its inception and expanded across 72 countries and 400,000 customers.
Last month, Quidax launched its native token, QDX, on the Binance Smart Chain. The token launch was a massive success, with the exchange selling out and raising $3 million in funds.
Even the CBN itself isn’t shying away from crypto. Last week, reports confirmed that the regulatory body is working hard on a Central Bank Digital Currency (CBDC). The asset is expected to launch trials before the end of the year, and it could mark a new chapter for a country looking to improve technological advancement.