Nigeria has emerged as the dominant player in sub-Saharan Africa’s cryptocurrency market, contributing approximately $59 billion to the region’s estimated $125 billion in crypto transactions between July 2023 and June 2024, according to a report released by KPMG Nigeria and blockchain firm Chainalysis.
This was a notable achievement despite the Central Bank of Nigeria’s (CBN) 2021 ban on cryptocurrency trading, which highlighted both the resilience and growing adoption of digital assets in the country.
The report, titled Crypto Risk and Opportunities in Nigeria: A New Banking Paradigm, revealed that economic hardship played a significant role in driving Nigeria’s high rate of crypto adoption. The study also highlighted that 85 per cent of the total crypto value received by local exchanges in Nigeria came from small retail and professional transactions under $1 million. “This signals the real-world utilisation of crypto, especially in day-to-day transactions, rather than as an investment alternative,” the report stated.
Despite Nigeria’s leading position in the region, crypto transaction inflows had seen slight fluctuations between 2021 and 2023, with minor dips in consecutive years. However, 2024 witnessed a remarkable rebound, with inflows rising by approximately 25 per cent year-on-year. The report noted that the decline in crypto value from $47.0 billion in 2021 to $45.0 billion in 2022 aligned with broader market trends. The subsequent rise from $44.3 billion in 2023 to $55.4 billion in 2024 reflected a wider market recovery.
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It was recalled that the Central Bank of Nigeria had, in February 2021, prohibited financial institutions from facilitating crypto transactions. To uphold this ban, the CBN fined six banks a total of N1.31 billion in 2022 for allegedly violating its cryptocurrency directive. However, in December 2023, the CBN partially reversed the ban, allowing banks to collaborate with licensed crypto firms. The bank also disclosed that it had been in continuous discussions with the Securities and Exchange Commission (SEC) regarding the adoption of crypto transactions in the country. The SEC revealed last month that it was working on new guidelines aimed at taxing cryptocurrency trading and digital transactions as part of a broader effort to increase revenue.
The SEC also disclosed plans to expand the scope of crypto licensing, including issuing permits for residents to trade on formalised, centralized exchanges where transactions could be monitored and taxed.
KPMG and Chainalysis indicated that the devaluation of the Naira in 2024 might have impacted the adoption patterns among Nigerians. “Additionally, the high costs associated with cross-border transactions via traditional finance channels may have driven many Nigerians, both domestically and in the diaspora, to leverage crypto for a faster and more cost-effective remittance alternative,” the report suggested.
The report also revealed that with crypto scam revenues reaching $10 billion in 2024, Nigerian banks were urged to utilise advanced technologies, such as blockchain analytics, to detect illicit financial activities. “By incorporating on-chain metrics in their assessments, they are able to develop a comprehensive view of counterparties, delivery channels, and even transaction patterns. At the same time, collaboration among banks, regulators, and virtual asset service providers (VASPs) in sharing intelligence, building technical capacity, and developing new standards for risk management will be key,” the report concluded.
