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Nigeria has witnessed a remarkable 9% year-over-year growth in the volume of cryptocurrency transactions, totaling $56.7 billion during the period from July 2022 to June 2023.
According to a report by the New York-based blockchain research firm Chainalysis, the adoption of cryptocurrencies in Nigeria is on the rise. This growth trend is occurring against the backdrop of challenges faced by Africa’s largest economy, including a depreciating currency and soaring inflation.
In contrast, Uganda, while smaller in terms of crypto usage, has shown rapid growth, with a remarkable 245% increase in crypto transactions amounting to $1.6 billion within the same timeframe.
Meanwhile, Kenya has witnessed a substantial decline, with crypto usage dropping by more than half to $8.4 billion, as outlined in the report.
Chainalysis points out that in Nigeria, interest in bitcoin and stablecoins has intensified significantly. Stablecoins are crypto tokens anchored to stable assets to mitigate extreme price fluctuations. This increased interest coincided with sharp declines in the value of the naira, particularly during the extreme market fluctuations observed in June and July 2023.
The depreciation of the currency was triggered by President Bola Tinubu’s implementation of sweeping reforms, including the discontinuation of a costly petrol subsidy and the removal of certain exchange rate restrictions.
Moyo Sodipo, co-founder of the Nigeria-based cryptocurrency exchange Busha, highlighted that “People are constantly looking for opportunities to hedge against the devaluation of the naira and the persistent economic decline since COVID.” This sentiment was reflected in the report.
It’s noteworthy that Nigeria had previously imposed restrictions, prohibiting its banks and financial institutions from engaging in or facilitating cryptocurrency transactions in 2021.
However, in the preceding year, the country’s financial regulatory body introduced a set of regulations concerning digital assets. This move signaled Nigeria’s attempt to strike a balance between an outright ban on crypto assets and their unregulated use.
Nigeria’s tech-savvy and youthful population has enthusiastically embraced cryptocurrencies, utilizing options such as peer-to-peer trading on crypto exchanges as a means to circumvent the restrictions imposed by the traditional financial sector, as highlighted in the report.
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