Nigeria has witnessed a significant surge in its cryptocurrency transaction volume, registering an impressive 9% year-over-year growth, reaching a total of $56.7 billion for the period between July 2022 and June 2023, according to a report from the New York-based blockchain research firm Chainalysis. This upward trend underscores the growing adoption of cryptocurrencies in Nigeria, even amidst the economic challenges faced by Africa’s largest economy, including currency depreciation and soaring inflation.

In contrast, Uganda, while smaller in terms of crypto usage, experienced remarkable growth with a staggering 245% increase in crypto transactions, amounting to $1.6 billion within the same timeframe. Meanwhile, Kenya witnessed a substantial decline, with crypto usage plummeting by more than half to $8.4 billion, as detailed in the report.

Factors Driving Nigeria’s Cryptocurrency Interest

Chainalysis highlights that the surge in interest in Bitcoin and stablecoins in Nigeria is closely tied to the significant depreciation of the Naira, especially during the extreme market fluctuations witnessed in June and July of 2023. President Bola Tinubu’s implementation of sweeping economic reforms, including the discontinuation of a popular yet costly petrol subsidy and the removal of certain exchange rate restrictions, contributed to the currency’s depreciation.

Moyo Sodipo, co-founder of the Nigeria-based cryptocurrency exchange Busha, emphasized, “People are constantly looking for opportunities to hedge against the devaluation of the Naira and the persistent economic decline since COVID,” a sentiment echoed in the accompanying report.

Cryptocurrency Regulation in Nigeria

It’s important to note that Nigeria had previously imposed restrictions in 2021, barring its banks and financial institutions from engaging in or facilitating cryptocurrency transactions. However, in the preceding year, the country’s financial regulatory body introduced a set of regulations concerning digital assets. This shift signaled Nigeria’s attempt to strike a balance between an outright ban on crypto assets and their unregulated use.

Nigeria’s tech-savvy and youthful population has eagerly embraced cryptocurrencies, utilizing options such as peer-to-peer trading on crypto exchanges as a means to circumvent the restrictions imposed by the traditional financial sector, as highlighted in the report.