A report by Chainalysis highlights that cryptocurrency adoption in Nigeria is increasing, with the country receiving approximately $59 billion in cryptocurrency from July 2023 to June 2024. The rise is attributed to a depreciating currency and surging inflation, exacerbated by a foreign exchange crisis.
A recent report by New York-based blockchain research firm Chainalysis revealed that cryptocurrency adoption in Nigeria is on the rise, largely driven by the country’s depreciating currency and surging inflation.
Nigeria ranked second overall on the firm’s Global Adoption Index, receiving approximately $59 billion in cryptocurrency value between July 2023 and June 2024. This marks a 4.06% increase from the $56.7 billion recorded in the previous year.
Nigeria, like many African nations, is grappling with a foreign exchange crisis that is pushing citizens and businesses toward cryptocurrency.
Chris Maurice, CEO and Co-Founder of Yellow Card, emphasized that approximately 70% of African countries are experiencing foreign exchange shortages, making it difficult for businesses to access the necessary dollars to operate.
“There are no dollars available from banks or the government, and even if they were, they wouldn’t distribute them,” Maurice stated. This has led many Nigerians to turn to stablecoins, as banks struggle to provide adequate foreign currency.
The report comes amid discussions within the Nigerian government regarding the regulation of the $56.7 billion peer-to-peer cryptocurrency market.
There are concerns about the activities of major exchanges, such as Binance, which has been accused of contributing to the naira’s devaluation and destabilizing the economy through practices like implementing price caps on USDT trading.
The Federal Government previously restricted banks and financial institutions from operating accounts for cryptocurrency service providers in 2021.
However, in December 2023, the Central Bank of Nigeria (CBN) lifted this ban and reversed the policy, signalling a shift in the regulatory landscape.
The potential suspension of the peer-to-peer market has drawn heavy criticism, particularly from the 33.4 million individuals actively trading cryptocurrencies, many of whom rely on it as their primary source of income.
As Nigeria continues to navigate its economic challenges, the increasing reliance on cryptocurrency is becoming an important factor in its financial landscape.
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