Crypto Adoption On The Rise In Nigeria, Chainalysis Finds

In Nigeria, the interest in Bitcoin and stablecoins escalated as the value of the naira plummeted.

Nigeria had previously prohibited its banks and financial entities from engaging in or facilitating cryptocurrency transactions back in 2021.

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Cryptocurrency adoption is seeing a boom in Nigeria, with the country contending with a weakening currency and high inflation, as outlined in a report by New York-based blockchain research firm Chainalysis on Tuesday. Between July 2022 and June 2023, Nigeria witnessed a 9 per cent year-over-year increase in cryptocurrency transactions, amounting to $56.7 billion.

In Uganda, while the volume of crypto transactions is smaller, it's experiencing rapid growth, surging by 245 per cent to $1.6 billion during the same period. Conversely, Kenya saw a decline of over half, with crypto use amounting to $8.4 billion, according to the report.

In Nigeria, the interest in Bitcoin and stablecoins — crypto tokens tied to stable assets to mitigate volatility — escalated as the value of the naira plummeted, particularly during severe drops in June and July of 2023, according to Chainalysis.

The naira weakened to historic lows after President Bola Tinubu initiated substantial reforms, including the removal of a popular yet expensive petrol subsidy and certain exchange rate constraints, marking some of Nigeria's boldest reforms in recent years.

Moyo Sodipo, co-founder of Nigeria-based cryptocurrency exchange Busha, noted, "People are constantly looking for opportunities to hedge against the devaluation of the naira and the persistent economic decline since COVID," in a statement shared with the report.

It's important to note that Nigeria had previously prohibited its banks and financial entities from engaging in or facilitating cryptocurrency transactions back in 2021.

In the previous year, the nation's financial regulatory body had published a set of regulations for digital assets, indicating an attempt to strike a balance between an outright ban on crypto assets and their unregulated use, highlighting the country's efforts to regulate the crypto landscape.

Nigeria's youthful and tech-savvy population has enthusiastically embraced cryptocurrencies, utilising peer-to-peer trading offered by crypto exchanges to navigate the restrictions imposed by the financial sector.

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.