Categories: Regulation News

P2P trading to spike in Nigeria following crypto ban

TL;DR Breakdown

  • P2P trading to rise as an aftermath of crypto ban in Nigeria
  • CBN has given no explanation for the ban on crypto

Following the Central Bank of Nigeria’s (CBN) ban on banks from processing cryptocurrencies, P2P trading has been tipped to spike in the West African country. Changpeng Zhao, CEO of crypto exchange Binance, said afterwards that Nigeria banks would stop working with exchanges and predicted that P2P trading would grow as a result. He urged Nigerians to withdraw their Naira (NGN) as early as possible to avoid potential channel issues.

Danny Oyekan, CEO and founder of Dan Holdings, a blockchain investment company, also shares Zhao’s opinion on P2P trading. He said in an interview that the central bank’s directive would “slow down innovation.”

“And not just [for] Nigeria,” he said. “Considering that Nigeria is Africa’s largest market and the most populous country, I think this news may influence other African countries.”

According to him, tightening rules on crypto in Nigeria will also push traders and investors to seek alternatives, he said, such as peer-to-peer exchanges, where cryptocurrencies can be swapped for things other than fiat currencies, such as gift cards.

Why P2P trading? What happened to crypto in Nigeria?

The CBN on Friday published a release prohibiting banks in the country from offering their services for customers who buy, sell, or trade cryptocurrencies. The bank did not give any suitable explanation in its letter apart from the “risk associated with cryptocurrency transactions.” The bank said that it would enforce prohibitions of crypto trading with immediate effect.

The growing crypto community in the country would now have to grapple with the uncertainty caused by the enforcement despite Nigeria being the second-largest Bitcoin trading volume in the world.

60,215 Bitcoin traded in Nigeria in the last five years worth more than $566 million, a figure surpassed only by the US.

Why the ban

Until this moment, there are still no official reasons given as to why the CBN blocked banks from processing crypto transactions. Only speculations and guesses as to why the apex bank in the country could have done this.

Rumor has it that the government has systematically placed a ban on crypto because it was used as a means of donations during the #EndSARS protest by youths in the country against police brutality.

This post was last modified on February 9, 2021 4:40 pm

Muhaimin Olowoporoku

Muhaimin loves writing on crypto news aside from being a crypto enthusiast. He has a knack for analysing issues and updating people on what's happening around the globe. He believes that blockchain and cryptocurrency are the most useful systems of mutual trust ever devised.

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