Is Nigerian Crypto Fad Waning?



Nigeria is a major player in the African blockchain landscape. It tops global interest in cryptocurrency, driven by its youthful population and a high rate of internet penetration. The country’s rampant inflation and currency devaluation also contribute to Nigerians’ fascination with digital currencies.

To further support this environment, the International Monetary Fund made a recent recommendation for Nigeria to license global cryptocurrency exchanges as part of economic reforms. This strategic move is expected to secure Nigeria’s position in the African cryptocurrency market.

Licensing would subject platforms to regulatory requirements, including Anti-Money Laundering controls. These regulatory measures can potentially improve remittance mechanisms and address macroeconomic challenges such as currency instability and inflation.

Recent regulatory changes in Nigeria include the Securities and Exchange Commission’s impending ban on peer-to-peer (P2P) cryptocurrency exchanges using naira. National Security Adviser (NSA) cites crypto trading as a national security threat. This shift follows major fintech startups like Moniepoint, Paga, and Palmpay blocking accounts involved in crypto dealings and reporting them to law enforcement.

Despite previous leniency towards crypto, recent months have seen a reversal, with authorities blaming speculators for forex market volatility and proposing bans on P2P trading, citing manipulation concerns.

Central Bank actions include freezing bank accounts linked to P2P transactions and directing fintech firms to halt new customer accounts, reflecting increased scrutiny over rapid fintech account proliferation.

Regulatory Clampdown

Recent regulatory actions in Nigeria have created significant ripples in the crypto sector. The Federal Government of Nigeria has imposed a $10 billion fine on Binance in February. The government is accusing the platform of operating without proper authorization and involvement in money laundering activities.

Binance’s Tigran Gambaryan and Nadeem Anjarwalla were also arrested in Nigeria over allegations of overlooking criminal activities like tax evasion and money laundering during the period. Despite Anjarwalla’s escape, both were charged along with Binance for these offenses.

This incident is part of a broader legal challenge against Binance, with its founder facing imprisonment in the US and Nigeria’s SEC previously declaring its operations illegal. Nigerian authorities’ actions against Binance are believed to stem from national security concerns and economic pressures.

However, some argue cryptocurrencies are not solely responsible for the naira’s decline. Additionally, the government’s crackdown on Binance might be influenced by its efforts to promote its central bank digital currency, the eNaira.

Nigerian regulators, led by central bank governor Yemi Cardoso, have long sought to control virtual currency operations due to concerns of currency speculation and alleged involvement in moving $26 billion in untraceable funds, notably by platforms like Binance.

Previous directives, such as blocking cryptocurrency-related accounts, have been issued, with attempts like introducing a digital naira yielding limited success. Recent statements from the EFCC chief have raised concerns about cryptocurrency trading being exploited for terrorism financing, adding to regulatory scrutiny in Nigeria.

Despite regulatory uncertainties, cryptocurrency trading in Nigeria is thriving. Experts believe Nigerians’ demand for crypto services will persist due to the instability of local fiat currencies and the need for alternative financial solutions.

Global blockchain research firm Chainalysis reveals that trading volume reached $56.7 billion between July 2022 and June 2023 with 9% year-over-year growth. Studies show a significant portion of Nigerians are still actively involved in cryptocurrency investment, particularly young adults.

While regulatory ambiguity may temporarily affect retail investors and institutional capital, long-term enthusiasm for crypto remains high with the potential for other exchanges to fill the void left by Binance.

Nigerians’ fascination with digital currencies has also extended into the gaming world as crypto gaming is becoming increasingly popular. According to a report by TechCabal, the integration of blockchain technology in games has enabled new forms of game mechanics and economies.

Crypto Gaming

Blockchain games are gaining traction with their offer of security and transparent gaming experiences. The play-to-earn model is particularly booming with titles like Axie Infinity, The Sandbox, and Decentraland topping the chart. This model provides an additional revenue stream for gamers as players earn cryptocurrency for their in-game achievements.

Another gaming sector that combines crypto with entertainment is the iGaming industry. Countless bookmakers, lotteries, and online casinos are now accepting cryptocurrencies as payment and withdrawal methods. For instance, players can spin the wheels on Big Win 777 after making a deposit using USDT.

Another noteworthy trend in Nigeria is Notcoin (NOT). NOT is a gaming token on the TON blockchain which was launched with a $1 billion FDV and listed on major exchanges like Binance, OKX, and Bybit. Notcoin generated $294 million in trading volume in its first hour. Notcoin’s unique attributes and its integration into various gaming platforms have made it a popular choice among Nigerians.

Hence, the long-term prospects for crypto in Nigeria remain promising despite the current challenges. The industry may need to adapt to a more regulated environment. However, the new regulatory measures could bring about greater stability and security for users.



Do you find Naijafinix Blog Useful??

Click Here for Feedback and 5-Star Rating!

1 Comment

Share your thoughts

Your email address will not be published.