The digital currency industry in Nigeria has been booming for a couple of years now as the country has managed to establish itself as the leader in adopting crypto even ahead of other countries such as Kenya or South Africa. Overall, only the US registers a higher peer-to-peer digital currency trading volume.
But the industry is now facing a huge threat as the central bank threatens to put an end to it all.
The founder and CEO of Belfrics, Praveen Kumar Vijaykumar, thinks that Nigeria has all the right conditions for a digital currency to bloom. Belfrics operates in Nigeria, Kenya, India, and Tanzania.
“There is no denying that the cryptocurrency industry has flourished in Nigeria. The lack of availability of dollars from the banks, limited capability to do foreign remittance, and lack of income streams have accelerated the growth of the digital currency industry in Nigeria,” he commented.
The founder and CEO of pan-African digital currency exchange and wallet company KuBitX, Eric Anaan, agrees, saying “Digital currencies provide a quicker avenue to send money across the continent to avoid excessive fees.” He also mentions that they “provide better banking experience for anyone; from the tomato seller in Maletta Market-Ghana to the leather maker in Kano-Nigeria, to have access to financial services without the usually long bureaucratic process.”
The Ban
Despite the amazing level of development, the digital currency industry in Nigeria faces a problem, as it can’t access basic banking services. The Central Bank of Nigeria (CBN) claims that it took this decision to protect Nigerians from the risks that come with crypto and the CBN governor went as far as to say that they are protecting investors as well.
The impact was, as expected, instant. Platforms for digital currency trading began to half fiat withdrawals and deposits as they had to follow the new rules. A trading platform with over three million users in Nigeria, Luno, was among those affected by this decision.
A statement by Luno said: “Any attempt to restrict access to cryptocurrency does not protect Nigerians. It holds them back and leaves them vulnerable. It prevents honest Nigerians from taking advantage of all that cryptocurrency has to offer them.” Still, Luno believes that, in the end, things will be regulated and not banned:
“Nigeria’s regulators have taken a pragmatic and forward-looking approach to cryptocurrency in the past, with the SEC even actively developing a framework to regulate. We’re confident that this issue can be resolved quickly so that Nigeria can continue to play a central role in the growth of cryptocurrency.”
The Hope
Annan of KuBitX shares this opinion. He commented that he understands where the fears of CBN are coming from, but he thinks that the blanket ban is not well informed.
“Our bankers and regulatory bodies are acting with fear and not with knowledge, but we are willing to help them understand and be a part of it. It will serve their core mandates of maintaining stability and controlling inflation for citizens, as well as stimulate economic growth,” he declared.
Belfrics has been more proactive, as Praveen revealed – the exchange keeps contact with the regulators as it wants to help them understand the industry better. It has also put on hold the majority of its projects as it awaits the outcome of the current regulatory stalemate. Praveen is sure that pretty soon, the Nigerian digital currency industry will be back at the top.