The Nigerian government recently renounced its stance on the ban on cryptocurrency and any of its related activities in the country. For Africa’s most populous country, this reversal comes right on time as Nigeria is currently battling an economic crisis and cryptocurrency approval will open doors to a potential upturn in digital payments and the nation’s economy at large. Let’s delve into the ripple effect of this reversal and what it holds for the future of financial activities in the country.
History of Cryptocurrency Ban in Nigeria
Nigeria’s relationship with cryptocurrency is characterized as a push-and-pull dynamic that features moments of acceptance and regulatory attitudes. Initially, the arrival of cryptocurrencies to millions of Nigerians was a joyous moment to behold as it served as yet another tool for financial redemption. Bitcoin and Ethereum gained traction among people and were particularly preferred for remittance and to also hedge against inflation and currency fluctuations.
As cryptocurrency extended its wings to every corner of the country, the once seemingly docile regulatory bodies began to formulate and impose exploit restrictions on the use of digital currency. In 2017, the Central Bank of Nigeria (CBN) issued widespread cautionary statements on the risks associated with owning or trading cryptocurrencies. This spun out of concern as the crypto market was experiencing volatility and rising cases of illegal financial transactions.
Following the initial notice, the CBN once again issued another notice to financial institutions dealing with cryptocurrencies or facilitating transactions for and to crypto-related organizations in 2018. Users on these platforms were skeptical of their assets, forcing many of these organizations to refund their customers and close down operations in Nigeria. Despite these regulatory challenges, Nigerians still sought alternative methods to facilitate crypto transactions.
However, on February 5, 2021, the government decided to fully clamp down on cryptocurrencies by issuing an executive directive prohibiting anything related to financing crypto. This included directing commercial banks to report any transaction related to cryptocurrency, generating massive criticism from the crypto community and the world at large. To respond to the international backlashes and also clarify the ban, the CBN cited numerous concerns like potential financial risks, volatility, and the absence of regulation violating the CBN Act.
This resulted in an in-house dispute between the CBN and the Securities and Exchange Commission (SEC) as the SEC once clarified crypto as a legal digital asset. But this claim was reversed after the CBN’s ban announcement. The ban stopped the hosting of virtual accounts for crypto users as well as the immediate closure of bank accounts involved in crypto transactions. Nigeria crypto users resorted to other methods of which P2P became the favorite.
Why did the Nigerian government reverse the Crypto ban?
2023 came bearing good gifts for Nigerian crypto traders as the government reversed its stance on the ban on cryptocurrency. As stated in the circular directive shared on December 22, 2023, the CBN cited several reasons for this reversal. One of many reasons that stood out is acknowledging the global need for regulating virtual asset service providers (VASPs) and encompassing cryptocurrencies and crypto assets.
The new directive also included specific guidelines on how VASPs and commercial institutions should manage accounts as well as deal with crypto-related organizations. The CBN highlighted that every old or upcoming VASP must obtain licensing from the Nigerian SEC to operate legally in the crypto sphere and also adhere to the strict regulatory conditions of operating digital assets.
One thing remains certain and that is the prohibition of commercial banks from participating in the trading, holding, and transacting with cryptocurrencies
The Effect of Nigeria’s Crypto Ban Reversal in 2024
Between July 2022 to June 2023, the volume of crypto transactions in Nigeria surged by 9% as total transactions rose to $56.7 billion, according to Chainalysis, a New York-based blockchain research firm. A direct impact of this stupendous growth is the remarkable expansion of Nigeria’s P2P crypto market. Similarly, in the same Chainalysis 2023 Global Crypto Adoption Index report, Nigeria also came top for P2P exchange trade volumes and ranked second for overall adoption while battling the total ban on the use of cryptocurrency.
Experts believe that the recent lifting of the ban in Nigeria is expected to impact the crypto market significantly. Having placed 11th in the recent rankings, Nigeria is predicted to surpass many expectations now that crypto transactions are legal to engage in. The lifting of the ban will also spur the growth of more VASPs in Nigeria and also attract more individuals and businesses into the crypto space.
One particular prediction is the rise in the use of crypto payment gateways to increase the adoption and usage of cryptocurrencies. With billions of transactions being conducted daily, crypto payment gateways will serve as a tool to help facilitate buying and selling between merchants and customers. As word spreads and adoption triples, experts believe only a fast and secure cryptocurrency payment processing can withstand the incoming influx of crypto adoptees.
Why PTPShopy is the best Crypto Payment Gateway for Nigeria Merchants
PTPShopy is a crypto payment gateway that facilitates crypto payments on your website. It is equipped with all the necessary tools that will allow you to accept multiple cryptocurrencies and its complex fraud protection techniques safeguard your data and digital assets from theft. Spanning from Europe to Asia and now Africa, PTPShopy caters to a wide range of business sectors and breaks down the barrier to entry.
Whether you are new to cryptocurrency or you are a seasoned business owner well versed in cryptocurrencies, PTPShopy is a cost-effective payment option for your business. For business owners skeptical about cryptocurrency rates during transactions, PTPShopy has a specialized platform that offers precise cryptocurrency rates.
It employs a mechanism that analyzes crypto rates from different trusted sources and its rigorous algorithm aggregates and verifies these rates before utilizing it during transactions. This rigorous verification ensures that every merchant takes full confidence in the real-time display of our cryptocurrency rates. Also, merchants are only charged <1% of the purchase price of every goods and service rendered so they can earn full profits.