Nigeria’s crypto trade thrives despite official disapproval

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Abolaji Odunjo, a gadget seller who trades in bitcoin, demonstrates a bitcoin application on his mobile phone in Lagos, Nigeria on August 31, 2020. REUTERS / Temilade Adelaja

LAGOS, October 12 (Reuters) – Nigerian art dealer Ebuka Joseph started using cryptocurrencies last year when business shut down due to COVID-19. Now he is addicted even though the financial authorities disapprove.

“Crypto just allows me to trade freely and within minutes we have completed our transactions,” the 28-year-old told Reuters from a friend’s studio in Lagos where he is exhibiting his work.

The Central Bank of Nigeria banned local banks from working with cryptocurrencies in February, warning of “tough regulatory sanctions” and freezing the accounts of companies it says use them.

But Joseph’s appetite for crypto, like many in Nigeria, only increased.

For people like him, the crackdown has highlighted the benefits of using currencies outside of the central bank’s control, and Nigeria remains the largest market for cryptocurrency trading platforms like Paxful.

Nigerians are turning to crypto for business, to protect their savings as the naira loses value and to send payments overseas as it is often difficult to get US dollars, experts told Reuters and users.

In March, just after the central bank ban, the dollar volume of cryptocurrencies sent from Nigeria jumped to $ 132 million, up 17% from the previous month, the research firm said. Chainalysis. Transactions in June were 25% higher than the same month last year.

Sly Megida, another artist who uses crypto to sell his works, said his buyers around the world are happy to accept the use of digital currencies and have also protected his finances.

“The naira is moving away and we are trying to keep the value of art,” he said, calling crypto “the currency where people don’t think I am paying too much or too less.

DANGERS REMAIN

The Paxful peer-to-peer platform that Joseph uses saw a 57% increase in transaction volume in Nigeria during the year through June, while the number of users increased by 83%.

Exchange Yellowcard, which adopted the peer-to-peer model in Nigeria since February, told Reuters that usage “has continued to skyrocket.”

Paxful, which opened an office in Abuja to pressure the government to change its attitude towards crypto, and Yellowcard said Nigerians generally look to crypto for business rather than speculation.

Chainalysis, in a report on African crypto last month, said the central bank ban excluded most Nigerians from traditional crypto exchanges, so many have moved to a peer-to-peer system.

This goes through platforms such as Paxful or Local Bitcoins, which control both parties. But other users are simply exchanging cryptos for Nigerian naira or other currencies with people they find on WhatsApp or Telegram.

As a result, Chainalysis said crypto usage in Nigeria is likely even higher than its numbers suggest.

Risks remain, however. In August, the central bank froze the accounts of some cryptocurrency users for allegedly obtaining funds from illegal forex traders, leaving many companies that use cryptocurrencies reluctant to talk about it.

Joseph, however, is not discouraged.

“You can sell to people out of the country, and they can actually pay in different currencies, which you can always convert,” Joseph said.

Reporting by Chijioke Ohuocha and Libby George; Additional reporting by Angela Ukomadu; Editing by Giles Elgood

Our Standards: The Thomson Reuters Trust Principles.

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