A leading cryptocurrency expert, Ray Youssef, CEO of NoOnes, has revealed that Nigeria’s peer-to-peer (P2P) crypto trading market is worth an astonishing $500 billion. This statement comes amidst an imminent ban on cryptocurrency in the country. Youssef emphasized that its official volume in Nigeria is around $59 billion annually, but this figure only accounts for centralized exchanges and does not include P2P transactions. He estimates that the actual volume is ten times higher, with most P2P transactions taking place outside of formal platforms, such as on WhatsApp, Telegram, and in-person meetings.
The Central Bank of Nigeria (CBN) has previously attempted to ban it, citing concerns about its use in illegal activities and its impact on the naira. However, the administration of President Bola Tinubu has since lifted the ban, directing banks and other financial institutions to carry out such services in accordance with regulatory guidelines. Despite this, the CBN has continued to crack down on the traders, freezing over 1,000 bank accounts involved in P2P transactions and accusing Binance, a global exchange, of processing $26 billion in untraceable transactions.
Different views on government regulations of crypto.
Of course, this move sparked outrage among Nigerians, who argue that the digital currency is legal and should not be scapegoated for the country’s economic woes. As the debate continues, experts warn that Nigeria’s economy is facing significant challenges, including a contracting economy, rising inflation, and security concerns. The Composite Purchasing Managers’ Index has declined sharply, and food and core inflation have risen, leading to an acceleration in headline inflation. Nigerians, especially P2P traders, have begun to express displeasure at the new development by the Federal Government, as many believe that cryptocurrency is legal and should not be seen as a factor behind the naira weakening.
Some have called on the CBN to focus on regulating cryptocurrency rather than battling against it, leveraging the system to their advantage, and concentrating on regulating it for beneficial use. The threat of a new crypto regulation that will ban peer-to-peer trading of cryptocurrencies has also raised concerns, with at least three Nigerian fintech start-ups warning that they will block the accounts of customers dealing in cryptocurrency and report those transactions to law enforcement agents.
Surge in P2P transactions because of crackdown.
Meanwhile, the crackdown on cryptocurrency traders has also led to a surge in P2P transactions, as traders seek to avoid detection by the authorities. This has resulted in a significant increase in the volume of P2P transactions, with many traders using social media platforms and messaging apps to facilitate their trades. The rise of P2P trading in Nigeria can be attributed to the country’s large youth population and the increasing adoption of cryptocurrency. Nigeria has one of the highest numbers of cryptocurrency users in Africa, with many young people seeing it as a way to earn a living and invest in the future.
However, the lack of regulation and oversight in the crypto market has also made it vulnerable to fraud and other illicit activities. The CBN has warned that it is being used to facilitate money laundering and terrorist financing, and has called for greater regulation and oversight in the sector. In spite of these challenges, many experts believe that cryptocurrency has the potential to revolutionize the financial sector in Nigeria. It offers a fast, secure, and transparent way to transfer funds, and can help to reduce the country’s reliance on cash.
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In addition, this digital currency can also help to promote financial inclusion, as it provides an alternative to traditional banking services. Many Nigerians do not have access to traditional banking services, and cryptocurrency offers a way for them to participate in the financial system. The CBN’s efforts to regulate the sector are a step in the right direction, but more needs to be done to address the challenges and risks associated with it. This includes providing greater clarity and guidance on the legal and regulatory framework for cryptocurrency, as well as increasing public awareness and education about the sector.
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