In a circular sent to banks on Dec. 22, the Central Bank of Nigeria (CBN) stated that it has now lifted restrictions on Nigerian banks facilitating cryptocurrency transactions. However, the crypto community anticipates competition to heat between the crypto-fiat exchanges and peer-to-peer (P2P) merchants.
The ban by CBN on Nigerian banks from aiding crypto transactions made P2P merchants dominant in the first place. The ban was supposed to stamp out Bitcoin and crypto use in Nigeria. Instead, the crypto community turned to peer-to-peer trades or sending payments directly to each other.
Cointelegraph contacted stakeholders in the local crypto ecosystem to understand how the industry and the community are receiving the new development. Speaking with Cointelegraph, Nathaniel Luz, co-founder and CMO of Flincap, stated that lifting the ban would be a huge plus for the industry. He opined that the development signals that Nigeria is ready for crypto businesses to be domiciled and operate in it.
Luz emphasized that with the lifting of the ban, institutional exchanges should be gearing up for the Nigerian market, as their absence during the ban enabled P2P to go through the roof at the expense of other crypto businesses.
“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.”
In response to whether the requirements of registration with the SEC would deter exchanges from coming into Nigeria to do business, Luz stated that while it poses a challenge for startups to get the SEC license, he believes it will benefit the crypto sector.
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He explained some changes in the Nigerian banking sector in 2010 with the recapitalization policy. It led to investors acquiring some banks, and some had to merge, leading to a better banking sector.
In February 2021, Cointelegraph reported that the Central Bank of Nigeria had banned all regulated financial institutions from offering services to crypto exchanges.
However, according to the circular, the CBN recognized that the increasing global demand and adoption of crypto make it unjustifiable to maintain the stringent restrictions imposed on financial institutions in 2021.
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