Nigeria’s cryptocurrency transactions hit $59bn despite ban

Nigeria’s cryptocurrency transactions soared to approximately $59 billion between July 2023 and June 2024, despite the Central Bank of Nigeria (CBN) prohibiting crypto trading in 2021.

This was according to a report by KPMG and blockchain analytics firm Chainalysis, which highlighted the growing role of crypto in Nigeria’s financial landscape.

The report revealed that Nigeria played a dominant role in sub-Saharan Africa’s crypto market, which accounted for an estimated $125 billion in transactions. The country’s $59 billion contribution made it the leading player in the region.

KPMG and Chainalysis attributed Nigeria’s significant crypto adoption to the country’s ongoing economic challenges.

The report noted that 85% of the total value of crypto received by local exchanges came from small retail and professional transactions under $1 million.

This suggested that Nigerians have been using cryptocurrency for everyday financial transactions, rather than just as an investment asset.

“Economic hardship has been a key driver of Nigeria’s high crypto adoption,” the report explained.

The report further pointed out that high costs associated with cross-border transactions through traditional banking systems have encouraged Nigerians, both within the country and in the diaspora, to seek alternative methods. Cryptocurrency, it stated, offered a faster and more cost-effective option for remittances.

Despite the CBN’s ban on crypto trading, the report found that the restrictions had done little to stem its growth. Nigeria’s share of the global crypto market continued to rise, underscoring the increasing importance of crypto in the country’s economy.

KPMG and Chainalysis recommended that a shift towards regulation and integration of cryptocurrencies into the financial system could be more beneficial than the outright ban imposed by the CBN. They suggested that cooperation between banks and blockchain companies could help financial institutions tap into technological innovations, allowing them to enhance monitoring systems beyond traditional capabilities.

However, the report also highlighted the risks associated with the widespread adoption of cryptocurrency, particularly in relation to scams and fraud. It revealed that crypto-related scams were estimated to have generated $10 billion in 2024, with “pig-butchering” and high-yield investment scams accounting for 83.4% of the fraudulent activities.

As crypto adoption continues to rise, the report emphasised the need for a regulatory framework that encourages innovation while protecting users from illicit activities.