Despite a ban on cryptocurrency trading by the Central Bank of Nigeria (CBN), the country has significantly contributed to the global digital asset market, with an estimated $59 billion flowing into crypto assets between July 2023 and June 2024, according to a new report.
The study, conducted by KPMG in collaboration with blockchain analytics firm Chainalysis, underscores the growing role of cryptocurrency in Nigeria’s financial ecosystem. The report, obtained by The Guardian, revealed that sub-Saharan Africa accounted for approximately $125 billion in crypto transactions during the period, with Nigeria leading the region.
The findings suggest that economic hardship and limited access to traditional financial services have driven many Nigerians to embrace cryptocurrency. Notably, 85 per cent of the total crypto value received by Nigeria’s local exchanges came from small-denomination retail and professional-sized transactions under $1 million.
“This signals the real-world utilisation of crypto, especially in the day-to-day transactions, rather than as an investment alternative,” the report stated.
The report also highlighted the impact of high costs associated with cross-border transactions through traditional financial channels. It suggested that many Nigerians, both within the country and in the diaspora, have turned to cryptocurrency as a faster and more cost-effective remittance solution.
KPMG and Chainalysis noted that the CBN’s 2021 ban on crypto trading had unintended consequences. Rather than curbing its adoption, the restriction appears to have propelled Nigeria’s crypto economy, with the percentage of global crypto value flowing into the country continuing to rise since the ban was implemented.
The report recommended that Nigeria should reconsider its stance on cryptocurrency and instead focus on regulation and integration. It argued that a shift towards collaboration with blockchain firms could benefit both traditional banks and the broader financial system.
“By collaborating with blockchain companies and products, banks gain much-needed exposure to technological innovation,” the report stated, adding that financial institutions should leverage blockchain technology to enhance legacy monitoring systems with more sophisticated solutions.
However, the report also warned of the risks associated with crypto adoption, including its use for fraudulent activities. It revealed that crypto-related scams and fraud remain a global concern, with scam revenues reaching an estimated $10 billion in 2024. Of this figure, 83.4 per cent was attributed to pig-butchering and high-yield investment scams.
As Nigeria continues to navigate the complexities of crypto regulation, the report suggests that a balanced approach—one that fosters innovation while mitigating risks—could position the country as a leader in Africa’s digital financial revolution.
