Since the Central Bank of Nigeria (CBN) banned financial institutions from honoring cryptocurrency-related services in February 2021, one would assume that the volume of cryptocurrency-related transactions in the country would plummet but that is not the case as Nigeria’s volume of P2P transactions in Bitcoin was equivalent to $38 million in the month of June 2021.
Bitcoin transaction volumes have been on the decline in recent months, especially after the cryptocurrency market crash that saw flagship cryptocurrency, Bitcoin loses almost 50% of its value. Although the transaction volumes declined in most continents, Africa is the exception.
In Africa, Bitcoin is used regularly, not necessarily as an asset class meant for long-term holding but as a means to carry out international currency transfers and Nigeria is leading the way in Africa.
In February 2021, the CBN banned financial institutions from honoring cryptocurrency-related transactions and services with immediate effect, purportedly to protect Nigerian investors from the “volatility” and “Insecurity” of cryptocurrencies. Many speculate, however, that there are several other underlying reasons for the ban which have remained unspoken.
Nigeria’s P2P transaction volume at approximately $38 million in Bitcoin for the month of June is up 8.71% from last month’s volume which was $34.92 million. This confirms that despite banning financial institutions from facilitating cryptocurrency transactions in the country, Nigerians did not stop transacting in Bitcoin and other cryptocurrencies. The transactions were mostly facilitated by online platforms that are outside the control of the CBN and the Nigerian Government which is being used to trade Bitcoin in Nigeria.
This information does not give a full picture of the level of transactions that occurred in the month as it only combines the transaction volumes of 2 exchanges; Paxful and LocalBitcoins. Other popular exchanges like Binance and Remitano were not included.
This brings the total volume of P2P transactions for the first half of the year to approximately $205.73 million.
Also in June, Kenya ranked second with $13.4 million in Bitcoin transactions in Africa. The surprise comes in the third position, a spot that Ghana snatched from South Africa with $11.2 million. South Africa comes in fourth with $7.7 million.
What to expect
Even with an outright ban on cryptocurrency-related transactions for financial institutions within the country, Nigeria has not stopped leading the African continent in cryptocurrency-related transactions as traders have now moved to P2P (Peer-to-Peer) trading, which is the first method of trading cryptocurrencies for cash.
Although the government intends to create its own CBDC (Central Bank Digital Currency), the volume of cryptocurrency transactions is only going to get bigger as more people become aware of the potentials of cryptocurrencies.
Bitcoin is trading at $32,500, up 1.91% for the day, as of the time of writing this report.
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