Crypto Traders in Nigeria Seek Alternate to P2P Exchanges after Ban

Crypto exchanges traders in Nigeria as turning their attention to peer-to-peer exchanges after the Nigerian apex bank announced a sweeping ban on related accounts associated with cryptocurrency purchase and trading in the country.

The apex bank announced the crypto ban last week in a circular signed by top officials of the Central Bank of Nigeria informed banks in Nigeria, ordering them to shut down such accounts. According to one bitcoin user who wishes to remain anonymous told E-play Africa. “There’s no way stopping Nigerians from crypto. It’s the future, and we won’t let some people who don’t understand the digital currency take our future from us,” he said. We are using the digital currency to mitigate the effect of the crisis and a way out of poverty. Like so many of us, the youths are jobless, and the depreciation of the Naira against the US dollar has not helped matters for many, and I see no reason to order banks to stop processing crypto. Even though the apex bank has reacted to the criticism from Nigerians saying that this is not a new order, but a reminder of a directive published in 2017 to have said cryptocurrencies was not a legal tender in Nigeria.

In reaction, some source has claimed the reason behind the Apex Bank approach is the fall in remittances. Diaspora earnings were strained due to the pandemic. Some experts argued the drop was that people were adopting other more efficient alternatives to send remittance, i.e., (cryptocurrencies) using the cheaper options.
In contrast, others claim it’s been used to finance terrorism and money laundering. In January, several crypto-active companies announced their transaction volumes for 2020; include Bushahub, Buycoins, and Bitsika, which revealed a total transaction volume above $400 million. While local players like Yellowcard, FrostPay, Instatcoins, Patricia, and RedimIt account for the entire transaction volume, 2020 is likely to be above $1.5 billion. Since a significant part of crypto transactions are remittances, it will always be a source of concern to a central bank that sees remittance control to achieve its exchange rate targets.

Meanwhile, Nigeria has become a hotspot for cryptocurrencies as an alternative to the Naira, a notional currency prone to depreciation. Nigerians have found various use cases for decentralized digital money, from trading bitcoin to make a living. Some Nigerian cryptocurrency users have shared their frustration regarding the directives.

And as vowed to continue using cryptocurrencies by embracing a P2P method that is harder to detect or stop. The decentralized nature of crypto ownership and trading means people can still buy and sell among themselves. That means a scenario where User A holds their cryptocurrency in an escrow with the exchange. In contrast, User B transfers a sum of money equivalent to the crypto being purchased to the bank account of User A on a receipt of naira equivalent. User A confirms the transactions, and the crypto is released to User B. though re-emergence of P2P transactions means there will be more cases of fraud in crypto.

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