Future of cryptocurrency in Nigeria as Federal Government lifts ban

In the latter days of 2023, the Central Bank of Nigeria (CBN) eventually relaxed its prohibition on Nigerian banks handling cryptocurrency transactions, after over two years of maintaining a full ban on banks dealing with digital currencies.

The CBN acknowledged in a circular to banks dated December 22, 2023, that the severe regulations placed on financial institutions in 2021 are no longer justified in light of the growing demand for and adoption of cryptocurrency worldwide.

Remember how the Central Bank of Nigeria (CBN) threw a regulatory curveball at the country’s cryptocurrency enthusiasts in February 2021, at the start of the latest bull run, by outlawing transactions between banks, cryptocurrency exchanges, and private individuals?

The cryptocurrency ban had a profound effect on the market and changed the situation for Nigerian users, forcing several cryptocurrency exchanges and businesses to close their doors and forcing others to find new ways to remain in operation.

The restriction has been abolished as of 2024, and this is reportedly a new chapter for Nigerian cryptocurrency users, giving them the ability to deal using their bank accounts once more.

What led to the CBN’s limit on cryptocurrency exchanges in February 2021?

Concerns about the possible hazards connected to cryptocurrency transactions led the Central Bank to decide to implement the prohibition in 2021.

Citing concerns like financing of terrorism and money laundering, the CBN sought to protect the financial system. Crypto fans expressed their dissatisfaction over what they saw as a stunting of innovation, however, there were differing opinions on this decision.

Effects of the limitation on the Nigerian cryptocurrency market, both immediately and later.

The Nigerian cryptocurrency market was significantly and immediately impacted by the prohibition. Nigerian cryptocurrency users were forced to look for other ways to buy and sell cryptocurrencies when they were unable to utilize their bank accounts for transactions. These other options led them to peer-to-peer markets.

But this development also brought up a new degree of deception and risk. First of all, many novices found peer-to-peer marketplaces awkward and difficult to use since they lacked the knowledge and agility needed to use them.

Additionally, a large number of Nigerian cryptocurrency users experienced various forms of extortion, manipulation, fraud, and scams at the hands of P2P vendors. Peer-to-peer transactions created a vulnerability since customers could no longer rely on reputable financial institutions; instead, they had to rely on trust. As reports of users falling for fraudulent schemes spread within the community, scams became a major problem.

Furthermore, the hassle of getting around the cryptocurrency ban reduced the speed and ease of transactions on Nigerian cryptocurrency exchanges, forcing them to come up with more clever ways for users to fund their accounts—a move that negatively impacted the user experience as a whole.

However, due in large part to the bull market of 2021 and early 2022, the trading volume of the Nigerian cryptocurrency market increased dramatically during this time, making Nigeria’s market the largest in Africa and among the best globally, according to international analytics platforms like Chainalysis.

What Nigerian cryptocurrency users might expect from the December 2023 rise.

For Nigerian cryptocurrency fans, the lifting of the embargo from February 2021 to December 2023 was a turning point in history.

This development indicates an understanding of how the environment is changing and the necessity of finding a balance between innovation and regulation. The barrier has been eliminated, allowing Nigerian cryptocurrency users to deal through their bank accounts with ease once more. This has restored normalcy to the rapidly expanding Nigerian cryptocurrency sector.

Furthermore, the lifting of the limitations relieves the situation and creates new opportunities for the Nigerian cryptocurrency industry.

The ease and security of using their bank accounts for cryptocurrency transactions is now available to users. It is anticipated that increased participation in the cryptocurrency market due to this accessibility will promote innovation and growth.

The lifting of the restriction is probably going to have a favorable effect on the economy. More investors and enthusiasts will be keen to participate in the market as more authorities appear to be embracing the technology.

Conclusion

The path taken by the cryptocurrency ban from its implementation in February 2021 to its repeal in December 2023 illustrates how Nigeria’s cryptocurrency market is evolving.

Nigeria is on the verge of a new era when innovation and regulation may coexist, creating a thriving and safe crypto environment for years to come, as the country’s crypto enthusiasts welcome this positive development.

Authors

Joshua Samuel

A conscientious writer with a knack and passion for story telling which spans across different sectors and segments. I love telling stories in writing and bringing quality, authentic and timely information to everyone everywhere.

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Samson Ayodeji

I am literally obsessed with technology. I love writing about the latest news in technology in different markets, segments and sectors across the world.

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