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Nigeria has been a focal point in cryptocurrency discussions, predominantly driven by its surging adoption.
However, a lack of clear regulations prompted the apex bank in the country to impose a ban on digital asset transactions. The dynamics might be poised for a transformation following a recent circular from the Central Bank of Nigeria (CBN).
Revamping Regulatory Approach
On December 22, 2023, the CBN issued a circular directing the country's banks to align with global cryptocurrency trends.
This circular supersedes previous ones from 2017 and 2021 that prohibited banks from engaging in crypto-related transactions. Simultaneously, the CBN unveiled guidelines delineating regulations for the country's virtual asset service providers (VASPs).
According to Crypto Daily, a noteworthy aspect of these new guidelines revolves around the requisites for opening and operating accounts for VASPs. Financial institutions must maintain comprehensive records of these VASPs, encompassing transaction details.
Moreover, users on these platforms must furnish means of identification for transactions, necessitating adherence to Know Your Customer (KYC) data requirements by both centralized and decentralized exchanges seeking approval.
Impressive Crypto Adoption Growth
Analyzing the 2022 cryptocurrency adoption report by Chainalysis reveals Nigeria's ascent from 18th to the top position in P2P exchange volume by 203.
According to AMB Crypto, the country secured second place in retail centralized service, contributing to an overall index ranking of second place. Amid market fluctuations, Nigeria's crypto economy expanded, marking a 9.0% year-over-year growth in transaction volume and positioning the nation among the select six globally with positive growth.
Significantly, stablecoins dominated transactions in Nigeria, driven by the imperative to hedge against the depreciating local currency, the Naira.
CoinMarketCap data showcased a noteworthy surge in market cap, propelled by rising asset prices, particularly Bitcoin. From late September 2023, the market cap soared from less than $1.10 to its current valuation exceeding $1.7 trillion. This trajectory underscores the resilience and transformative potential of Nigeria's evolving crypto market.
Photo: David Rotimi/Unsplash
