Bitcoin transactions soar among Nigerians despite CBN

Paxful, a cryptocurrency trading platform has reported that Nigerians were among the highest bitcoin traders in the last seven months.

This is despite the Central Bank of Nigeria’s restrictions on cryptocurrency transactions in the country and the crashing prices of cryptocurrencies globally.

Paxful in a statement said the volume of money sent by Nigerians via the network doubled from October 2021 to May 2022.

The statement from Paxful read in part, “Paxful, the leading global peer-to-peer (P2P) fintech platform announced that weekly transactions on the Lightning Network have increased tremendously.”

It added, “In Nigeria, the volume of money being sent out on Lightning has doubled from October 2021 to May 2022.”

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Paxful further disclosed that globally, deposit volume increased five times since the platform launched its integration on the Lightning Network in September 2021.

Paxful noted that the deposit volume increased by 54 per cent in April.

The CEO, and founder of Paxful, Ray Youssef, noted that Nigeria was one of the countries with the highest Bitcoin trade volume in the first week of May this year.

He said, “In the first week of May, Nigeria was one of the countries with the highest Bitcoin trade volume on Paxful alongside the United States, Ghana, China, and Kenya. Today, we have over 70 countries using Lightning on Paxful.”

In February of 2021, the CBN asked commercial banks to stop transacting in and with entities dealing in crypto assets.

The bank said, “Further to earlier regulatory directives on the subject, the bank hereby wishes to remind regulated institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.”

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Since the CBN issued the 2021 directive, cryptocurrency exchanges such as Binance have announced temporary suspensions of naira deposits. Additionally, Nigerians have had to find alternative methods, and often complex ways to purchase, deposit, sell or withdraw their cryptocurrencies outside the Nigerian banking system.

For context, in September 2020, the Nigerian Security and Exchange Commission (SEC) laid out a regulatory framework for the potential regulation of cryptocurrencies. At the time, SEC, the main capital market regulator, insisted that cryptocurrency assets were securities unless proven otherwise and that all Digital Assets Token Offerings (DATOs), Initial Coin Offerings (ICOs), Security Tokens and other blockchain-based offers of digital assets within Nigeria targeting Nigerian investors would be subject to the regulation of the commission.

Following CBN’s February announcement, however, the SEC suspended its plan. Although the SEC clarified that their suspension did not indicate a lack of alignment between the CBN and the SEC, the suspension undoubtedly revealed the lack of cohesion in the country’s policy direction in relation to cryptocurrencies.