Nigeria Leads Sub-Saharan Africa’s Cryptocurrency Market

Nigeria Cryptocurrency Market leads Sub-Saharan Africa with $59 Billion in Transactions and as the leading player in sub-Saharan Africa’s cryptocurrency market, accounting for approximately 59billion of the region’s estimated 125 billion in crypto transactions between July 2023 and June 2024, according to a joint report by KPMG Nigeria and blockchain analytics firm Chainalysis.

This milestone was achieved despite the Central Bank of Nigeria’s (CBN) 2021 ban on cryptocurrency trading, highlighting the resilience and widespread adoption of digital assets in the country. The report, titled Crypto Risk and Opportunities in Nigeria: A New Banking Paradigm, identified economic challenges as a major factor driving Nigeria’s high crypto adoption rates.

Economic Challenges Drive Crypto Usage

The report revealed that 85% of the total crypto value received by Nigerian exchanges came from small retail and professional transactions under $1 million. “This indicates the practical use of crypto in everyday transactions, rather than as a mere investment tool,” the report noted.

While Nigeria maintained its dominance in the region, crypto transaction inflows experienced slight fluctuations between 2021 and 2023, with minor declines in consecutive years. However, 2024 marked a significant recovery, with inflows increasing by approximately 25% year-on-year. The report pointed out that the drop in crypto value from $47.0billionin2021to$45.0 billion in 2022 mirrored global market trends. The subsequent rise from $44.3billionin2023to$55.4 billion in 2024 reflected a broader market rebound.

Regulatory Changes and Market Growth

In February 2021, the CBN banned financial institutions from facilitating crypto transactions, imposing fines totaling N1.31 billion on six banks in 2022 for allegedly violating the directive. However, in December 2023, the CBN partially lifted the ban, permitting banks to work with licensed crypto firms. The CBN also revealed ongoing discussions with the Securities and Exchange Commission (SEC) regarding the integration of crypto transactions into the financial system.

Last month, the SEC announced plans to introduce new regulations for taxing cryptocurrency trading and digital transactions as part of efforts to enhance revenue generation. The commission also outlined plans to expand crypto licensing, including granting permits for residents to trade on regulated, centralized exchanges where transactions can be monitored and taxed.

Naira Devaluation and Crypto Adoption

KPMG and Chainalysis suggested that the devaluation of the Naira in 2024 may have influenced crypto adoption patterns in Nigeria. “Additionally, the high costs associated with cross-border transactions through traditional financial channels may have driven many Nigerians, both at home and abroad, to adopt crypto as a faster and more cost-effective remittance solution,” the report stated.

Addressing Crypto-Related Fraud

With crypto scam revenues reaching $10 billion in 2024, the report urged Nigerian banks to leverage advanced technologies, such as blockchain analytics, to detect and prevent illicit financial activities. “By incorporating on-chain metrics into their assessments, banks can gain a comprehensive understanding of counterparties, transaction channels, and patterns. Collaboration among banks, regulators, and virtual asset service providers (VASPs) in sharing intelligence, building technical expertise, and developing robust risk management standards will be crucial,” the report concluded.

Nigeria’s leadership in sub-Saharan Africa’s crypto market underscores the country’s ability to adapt to regulatory challenges and economic pressures, cementing its role as a key player in the global digital asset ecosystem.