Crypto ban relaxed in Nigeria after almost three years

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Written on Dec 28, 2023

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Nigeria can once again officially trade in cryptocurrencies, within limits, according to its regulator.
A years-long ban on cryptocurrencies has been lifted by the Central Bank of Nigeria.
This means people may again make payments using cryptocurrency, as well as buying and selling with cryptos.

Nigeria can once again officially trade in cryptocurrencies, within limits, according to its regulator.

On December 22^nd, a communique sent out by the Central Bank of Nigeria (CBN) stated that the regulator had officially lifted its nearly three year-long restriction of the use of cryptocurrencies in the country.

This means that people can now make payments using cryptocurrency, as well as buying and selling cryptos in Nigeria. However, this only goes individuals and businesses: banks and other official lending institutions are still prohibited from transacting in, holding or trading using cryptocurrencies.

The use of cryptocurrencies in any form had been banned in February 2021 by the CBN in a letter, which ordered all financial services providers to shut down crypto-related accounts and cryptocurrency exchanges ‘with immediate effect’ after a substantial spike in what it called ‘unregulated transactions’ involving cryptocurrencies.

Uptake of cryptocurrency has risen meteorically in Nigeria in the past few years, particularly Bitcoin, despite of these restrictions. Chainanalysis, in a report earlier this year, explained the phenomenon:

Why the disproportionate uptake of Bitcoin? It may be that Sub-Saharan Africa residents are turning to so-called digital gold for an alternative store of value. Many countries in the region have struggled with rising inflation and debt, making cryptocurrency an attractive means of storing value, preserving savings, and attaining greater financial freedom… Nigeria’s uncertain economic climate has encouraged many citizens to seek financial alternatives, increasing the value proposition of cryptocurrency.”

The Naira has certainly been on a losing streak recently. The Naira has consistently been over NGN800 to the USD as of late, and sometimes as high as over NGN1000 to 1 USD, plus trading even at one Naira to ZAR0.20 of the humble South African rand.