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Nigeria lifts ban on crypto transactions, paving the way for competition in the market

TL;DR

  • Nigeria lifts crypto ban, sparking market competition.
  • P2P and institutional exchanges vie for market share.
  • EC registration requirement aims for a stronger crypto sector.

In a significant development for the cryptocurrency industry in Nigeria, the Central Bank of Nigeria (CBN) has officially lifted its ban on Nigerian banks facilitating cryptocurrency transactions. 

This decision, conveyed in a circular issued on December 22, marks a significant turning point for the Nigerian crypto ecosystem and has prompted discussions about the future landscape of crypto-fiat exchanges and peer-to-peer (P2P) merchants in the country.

A shift in the crypto landscape

The initial ban imposed by the CBN had unintentionally given rise to the dominance of P2P merchants in the Nigerian crypto market. The ban, which aimed to suppress the use of Bitcoin and other cryptocurrencies in Nigeria, instead led to a surge in peer-to-peer trades and direct payments between individuals within the crypto community.

Nathaniel Luz, the co-founder and Chief Marketing Officer (CMO) of Flincap, a prominent player in the Nigerian crypto space, expressed optimism about the removal of the ban. According to Luz, this decision signals Nigeria’s readiness to embrace crypto businesses and provide a conducive environment for them to operate.

With the ban now lifted, the crypto-fiat exchanges and P2P merchants are expected to engage in fierce competition for a share of the Nigerian crypto market. During the ban, P2P trading flourished due to the absence of institutional exchanges. Now, as these institutional exchanges gear up to re-enter the scene, it’s anticipated that they will clash with the P2P sector for dominance.

Nathaniel Luz emphasized the significance of this moment, stating, “So right now, it’s going to be the survival of the fittest as crypto-fiat exchanges and P2P merchants battle for the largest crypto P2P market in the world.”

SEC registration requirements

One potential challenge for crypto exchanges looking to enter the Nigerian market is the requirement for registration with the Securities and Exchange Commission (SEC). While this may pose hurdles for startups, Luz believes it will ultimately benefit the crypto sector. 

He drew a parallel with changes in the Nigerian banking sector in 2010 when a recapitalization policy led to mergers and acquisitions, ultimately resulting in a stronger and more robust banking sector.

The CBN’s decision to lift the ban is rooted in the recognition of the growing global demand and adoption of cryptocurrencies. The stringent restrictions imposed on financial institutions in 2021 were deemed unjustifiable in the face of this evolving landscape. 

This acknowledgment by the CBN reflects a shift in attitude toward cryptocurrencies and a willingness to adapt to the changing financial landscape.

The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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James Kinoti

A crypto enthusiast, James finds pleasure in sharing knowledge on fintech, cryptocurrency as well as blockchain and frontier technologies. The latest innovations in the crypto industry, crypto gaming, AI, blockchain technology, and other technologies are his preoccupation. His mission: be on track with transformative applications in various industries.

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