Impact of Cryptocurrency Ban on Nigerians and Fintech Companies

On February 5, many Nigerians who use cryptocurrencies for commercial transactions were astonished. The Apex Bank ordered the banking institution to terminate accounts of people or businesses engaged in Bitcoin transactions.

To facilitate payments for a cryptocurrency exchange, the Central Bank of Nigeria (CBN) stated clearly in its note. According to Paxful, Nigeria is the continent’s biggest cryptocurrency market. Nigeria boasts the world’s second-largest peer-to-peer Bitcoin trading volume, with 60,215 Bitcoins traded in the previous five years, worth over $566 million. According to Statista, roughly one-third of poll respondents said they utilized or owned crypto assets in 2020.

However, analyzing CBN instructions elicited diverse responses from players,

damaging both the Fintech economy and Nigerians. The crypto prohibition has impacted finance providers with a significant Nigerian consumer base, reducing processing prices for crypto transactions. As a result, everyday Crypto transactions are in the billions, despite the fact that finance providers would have to redesign their systems to be peer-to-peer. The order would harm these sites’ business since users will no longer be able to purchase bitcoin using Naira. The same goes for consumers who wish to withdraw Bitcoin to Naira, which is the currency of Nigerian operations. Users may now only swap cryptocurrencies but not Nigerian Naira. The apex bank’s suspension on February 5 has several stakeholders worried about the country’s investment confidence owing to the government’s indecisiveness.

While the instructions have caused certain financial platforms to stagnate, they have also impacted startups that employ Nigerians domestically and globally. However, others believe alternatives to the traditional banking system to better serve Nigerians. Due to a shortage of economic possibilities, many Nigerian teenagers turned to digital currency trading.

The prohibition would also increase Nigerian unemployment. Unlike earlier,

when Nigerians could easily acquire Crypto or Bitcoin, some crypto dealers in Nigeria have shifted to peer-to-peer trading. Buying Bitcoin on the P2P market is also expensive.

Since previously stated, transactions with digital assets on fintech platforms would decline as Nigerians will no longer be able to purchase and sell digital currencies using debit cards or bank transfers.

The restriction now affects fintech since peer-to-peer transactions influence the value of bitcoin per dollar. Finding a buyer or seller will be difficult, affecting the daily amount of crypto transactions. This restriction would affect Nigerians who work in bitcoin trading.

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