Nigeria has been the focus of cryptocurrency discussions, especially due to its increasing adoption.
However, the lack of clear rules led the country's main banks to impose a ban on digital asset trading. Following a recent circular from the Central Bank of Nigeria (CBN), this may be about to change.
Updating the Regulatory Approach
On December 22, 2023, the CBN issued a directive to banks in the country to adapt to the global cryptocurrency trend.
This circular replaces previous bans imposed on banks in 2017 and 2021 from carrying out cryptocurrency-related transactions. Likewise, the CBN has issued guidelines for the regulation of Virtual Asset Service Providers (VASP) in the country.
According to Crypto Daily, an interesting aspect of the new rules focuses on the requirements VASPs must meet to open and manage accounts. Financial institutions must maintain complete records of these VASPs, including transaction details.
Additionally, users of these platforms must provide an authentication method for transactions that require Know Your Customer (KYC) information on both centralized and decentralized exchanges.
Tremendous growth in cryptocurrency adoption
An analysis of Chaina's analytical report on cryptocurrency adoption in 2022 shows that Nigeria has risen from 18th to first place in P2P exchange rates with 203.
According to AMB Crypto, the country ranked second in retail-focused services, securing second place in the overall index. Amid market volatility, Nigeria's cryptocurrency economy has thrived, recording transaction volume growth of 9.0% year-on-year, placing the country among the top six countries in the world.
In particular, stablecoins dominate transactions in Nigeria, which is forced to hedge against the more valuable local currency, the naira.
Data from CoinMarketCap shows a significant increase in asset prices, especially Bitcoin. By the end of September 2023, the market value had increased from less than $1.10 to its current value of more than $1.7 trillion. This trend highlights the resilience and transformative potential of the Nigerian cryptocurrency market.
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