By Brenda Collins
Chainalysis, a New York-based crypto analytics company, reported in its recent analysis that Nigeria continually experiences growth in the adoption of cryptocurrency innovation in spite of the economic challenges the country is facing.
Nigeria, which is the most populous country in Africa, has witnessed a massive surge in cryptocurrency adoption, according to the report from Chainalysis. In addition, the huge increment was associated with the challenging economic conditions in the country, which reportedly drove its youths to invest more in technological resurgence.
Considering Nigeria has the biggest economy in Africa, the report pointed out that the impact of the massive growth in the crypto industry in the country cannot be over-emphasized. In addition, with the current naira devaluation, Nigerians are constantly seeking versatile monetary alternatives for their poor economic state.
According to the statistics in Chainalysis’ report, between July 2022 and June 2023, the cryptocurrency transactions recorded in Nigeria were about $56.7 billion, forming a 9% increase on the year-over-year rate. The report also showed that neighboring African countries experienced a massive surge in crypto transactions, too. For instance, Uganda recorded $1.6 billion in crypto trade, which amounts to about 245% year-on-year.
Naira’s Value Declines, Growing Crypto Adoption In Nigeria
However, a different scenario played out in Kenya, as the country reportedly saw a drastic decline in cryptocurrency adoption as it experienced a 50% drop to $8.4 billion year-over-year crypto transactions.
Meanwhile, the huge uptrend in crypto adoption co-occurs with major economic turbulence in Nigeria. This is because the value of the Nigerian currency, the Naira, continues to drop value against the United States dollar. And according to reports, the prevalent financial instability in the country has forced many to venture into cryptocurrency as a viable alternative.
Furthermore, the rate of crypto-backed stablecoins like USDT and USDC has surged because stablecoins offer more stability than other cryptocurrency assets, especially in a fluctuating economy. Reports showed that the naira’s recent decline to record lows could be linked to the multiple bold regulation reforms initiated by the President of Nigeria, Bola Tinubu. For instance, the president reported removing the subsidy on petrol prices and lifting some exchange rate bans.
Remarking on the latest development, Moyo Sodipo, the CEO of Busha exchange, a crypto platform based in Nigeria, expressed her opinion on why crypto kept thriving in Nigeria despite the bad economy. In her speech, she stated that the citizens of the country have been on the constant lookout for alternatives to hedge over the declining naira value and prevalent economy turndown since the COVID-19 pandemic.
Nigeria Regulators Maintain Hostile Stance Against Crypto
But, it is notable that there has been some friction between the authorities of Nigeria and the crypto industry. Previously, in 2021, banks and other financial institutions were banned from processing or executing any crypto transactions. They announced the sanction, stating that cryptocurrency exposes Nigerian investors to financial volatility risks, cybercrime, terrorism financing, and money laundering.
However, a year after the ban was implemented, the Securities and Exchange Commission of Nigeria issued a set of rules to regulate the digital assets industry, suggesting that the nation’s authority might be changing its stance on cryptocurrency. According to the report, the SEC’s rules, which were contained in a 54-page document, discussed crypto assets launches and safekeeping. Also, the released regulations reportedly classified crypto as security, under the obligation of the SEC to regulate.
Furthermore, the Nigerian SEC had previously declared that any exchange or platform offering crypto-related products or services must first register with the commission before establishing its business in the region of the country. In addition, the report showed that registering a crypto firm with the authority would cost about 30 million naira ($72,290) and some other minor charges. Crypto experts described the regulators’ action as a means to balance between a total crypto ban and managing the wide use of digital assets.
At Tokenhell, we help over 5,000 crypto companies amplify their content reach—and you can join them! For inquiries, reach out to us at info@tokenhell.com. Please remember, cryptocurrencies are highly volatile assets. Always conduct thorough research before making any investment decisions. Some content on this website, including posts under Crypto Cable, Sponsored Articles, and Press Releases, is provided by guest contributors or paid sponsors. The views expressed in these posts do not necessarily represent the opinions of Tokenhell. We are not responsible for the accuracy, quality, or reliability of any third-party content, advertisements, products, or banners featured on this site. For more details, please review our full terms and conditions / disclaimer.