By Shelly Melancon (Switzerland)
Peer to Peer transactions on crypto are on the rise in Nigeria despite restrictions placed by the central bank of Nigeria back in February. Available data puts the amount of transactions traded by investors and crypto traders in the country at $38 million, the second highest amount recorded since March, following the ban. In April and May, transactions traded amounted to $35.2 million and $34.9 million, respectively.
These figures are an indication that Nigerians have shown more interest in trading and investing in crypto. Ironically, the February restriction was expected to affect the volume of crypto transactions, but it has been on an upward roll since then. Even in February, the transaction volume recorded was above $30 million.
CBN Says Cryptocurrencies Causing Naira to Fail, Affecting Forex Remittance
While issuing the ban, where it directed banking institutions across the country to withdraw their services from crypto exchanges, the CBN reasoned in its circular that cryptocurrencies were causing the country’s official currency, Naira, to fail. Another reason the principal bank highlighted in its reports is that they were affecting forex remittance into the country.
Truly, this was the case as Nigerians in diaspora resorted to using crypto to facilitate payments to their friends and families in Nigeria. Their decision arose from the reasoning that cryptocurrencies offer the perks of faster transactions, lesser fees and direct dealing, unlike banking institutions. However, the central bank claimed that cryptocurrencies aided and abetted illegal activities because they were untraceable.
Although the CBN has rescinded the decision on crypto transactions, the alternatives Nigerians resorted to have become the mainstay. One of the alternatives is the P2P system, which allows individuals to deal directly with themselves. In light of the restrictions, Binance, which is a leading crypto exchange in the country and around the world created a P2P system on its platform which connects crypto investors together and helps them buy and sell crypto including stablecoins.
Nigeria Leads African Crypto Community
Moreover, Nigeria still retains its position in Africa as the fastest growing crypto community. East African country Kenya trails behind in second place recording about $13 million in June. According to reports, the volume for June is lower than figures recorded in previous months. West African counterpart Ghana had its transaction volume increase by two folds last month, giving it the opportunity to displace South Africa which was formerly in third place on the list. In June, South Africans transacted $7.7 million.
Meanwhile, the central bank is also making an attempt to release a digital version of the official currency, preferably known as a central bank digital currency (CBDC). According to the bank’s Governor, Godwin Emefiele, a CBDC will be rolled out before the end of year. This makes Nigeria one of the many countries that have indicated interest in a CBDC. A host of them have already begun pilot programs for their CBDCs. In fact, Asian giant, China, has begun distribution of the digital Yuan.
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