Nigeria’s digital currency industry has been thriving for years now. The West African nation established itself as the leader in adoption on the continent ahead of South Africa and Kenya. Globally, it’s only second to the U.S. in peer-to-peer digital currency trading volume. However, the industry faces its biggest threat yet following a central bank ban that has denied it basic banking services.
Nigeria has the perfect conditions for digital currencies to thrive, Praveen Kumar Vijaykumar tells CoinGeek. Praveen is the founder and CEO of Belfrics, a Malaysian digital currency exchange operating in Nigeria, Kenya, Tanzania and India.
“There is no denial that the cryptocurrency industry has flourished in Nigeria. The lack of availability of dollars from the banks, limited capability to do foreign remittance and lack of income streams have accelerated the growth of the digital currency industry in Nigeria,” he tells us.
Eric Annan, the founder and CEO of pan-African digital currency exchange and wallet company KuBitX concurs. “Digital currencies provide a quicker avenue to send money across the continent to avoid excessive fees,” he tells CoinGeek. In addition, they “provide better banking experience for anyone; from the tomato seller in Malatta Market-Ghana to the leather maker in Kano-Nigeria, to have access to financial services without the usually long bureaucratic process.”
The CBN ban
Despite the stellar growth, the Nigerian digital currency industry is currently unable to access basic banking services. The CBN has claimed that its decision was to protect Nigerians from the risks associated with the industry. CBN’s governor even defended the bank’s action in the Senate, saying it was looking out for investors.
The impact was immediate. Digital currency trading platforms started halting fiat withdrawals and deposits as they strived to remain compliant. Luno, a trading platform that has over three million users in Nigeria was among the casualties.
In statement shared with CoinGeek, the company said, “Any attempt to restrict access to cryptocurrency does not protect Nigerians. It holds them back and leaves them vulnerable. It prevents honest Nigerians from taking advantage of all that cryptocurrency has to offer them.”
London-based Luno, however, is confident that the watchdog will choose to regulate, rather than ban.
“Nigeria’s regulators have taken a pragmatic and forward-looking approach to cryptocurrency in the past, with the SEC even actively developing a framework to regulate. We’re confident that this issue can be resolved quickly, so that Nigeria can continue to play a central role in the growth of cryptocurrency,” it added.
KuBitX’s Annan holds a similar view. While he understands the CBN’s fear and uncertainty on digital currencies, he believes that the blanket ban is ill informed.
“Our bankers and regulatory bodies are acting with fear and not with knowledge, but we are willing to help them understand and be a part of it. It will serve their core mandates of maintaining stability and controlling inflation for citizens, as well as stimulate economic growth,” he tells CoinGeek.
Belfrics, on its part, has taken a more proactive approach. As the CEO tells us, the exchange is in touch with the regulators as it seeks to help them understand the industry better. It has paused most of its projects as it awaits the outcome of the current regulatory stalemate. Praveen believes it won’t be long before the Nigerian digital currency industry is back at the top where it belongs.
See also: CoinGeek Live panel, Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers
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