The Nigerian central bank has placed a ban on financial institutions supporting any cryptocurrency transaction, including the purchase and sale of Bitcoin and other altcoins and other digital assets through banks.
Nigeria undoubtedly has one of the largest Bitcoin markets in Africa, with a more than 20 percent increase in recent years.
The ban further stated that financial institutions must terminate the accounts of customers who engage in crypto trading, and any financial institution that fails to do so will be sanctioned by the central bank.
For Nigerians, the ban came as a shock and was heartbreaking. Many people’s money was tied up in one exchange or another, and they couldn’t convert it to fiat for fear of having their bank account cancelled and their ability to trade in bitcoin revoked.
The central bank of Nigeria explained in a circular that the ban was imposed because cryptocurrency has recently been used in Nigeria for fraudulent activities that are untraceable. As a result, the ban is intended to break the link that connects financial institutions to such activities. As a result, cryptocurrency is not banned , but the exchange of crypto to naira ( Nigerian currency ) is.
They must, however, devise a method of removing their money from those exchanges, so identifying an alternative. One would expect that with the active prohibition on cryptocurrencies, the rate of bitcoin trade would fall, but this is not the case. Cryptocurrency trading is still popular among Nigerians.
The reason is not far-fetched. People in Nigeria continue to buy Bitcoin due to rising inflation and a lack of trust in traditional fiat currency. The value of the Nigerian naira has dropped significantly in recent years, and one solution is to store the value of the currency by purchasing assets such as gold, diamonds, and digital assets.
Despite the crackdown, there are two major ways for Nigerians to trade cryptocurrency, which are Peer-to-Peer Platforms and the use of alternative currency.