- December 25, 2023
- Posted by: [email protected]
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Following the Central Bank of Nigeria’s (CBN) recent decision to lift restrictions on Nigerian banks facilitating cryptocurrency transactions, the crypto landscape in Nigeria is bracing for a significant shift. Nathaniel Luz, co-founder and CMO of Flincap, emphasized the need for institutional exchanges to prepare for the emerging opportunities in the Nigerian market. The ban, initially intended to curb cryptocurrency use, inadvertently propelled peer-to-peer (P2P) merchants to dominance as users turned to direct transactions to circumvent banking restrictions.
The CBN officially lifted the restriction in a circular sent on December 22, marking a pivotal moment for the local crypto community. Several crypto reporters reached out to stakeholders within the Nigerian crypto ecosystem to gauge their reactions to the development. The lifting of the ban, according to Luz, is a significant positive for the industry, signaling that Nigeria is now open for crypto businesses to thrive and operate within its borders.
Luz further highlighted that during the ban, P2P transactions skyrocketed, leaving institutional exchanges on the sidelines. With the ban lifted, a new battleground is set to emerge as both crypto-fiat exchanges and P2P merchants vie for dominance in what Luz refers to as “the largest crypto P2P market in the world.” The competitive landscape is expected to intensify, marking a phase of survival for the fittest.
Addressing concerns about regulatory hurdles, Luz acknowledged that while obtaining a license from the Securities and Exchange Commission (SEC) might pose challenges for startups, he believes it will ultimately benefit the crypto sector. Drawing parallels to changes in the Nigerian banking sector in 2010, Luz explained how the recapitalization policy led to positive transformations, with investors acquiring and merging banks, ultimately contributing to a more robust banking sector.
The crypto industry in Nigeria faced adversity in February 2021 when the CBN imposed a ban on regulated financial institutions providing services to crypto exchanges. However, the recent circular acknowledges the global surge in demand and adoption of crypto, deeming the previous stringent restrictions unjustifiable. As the Nigerian crypto space enters a new era, industry players are gearing up for a dynamic and competitive landscape, with the potential for institutional exchanges to reclaim their prominence alongside resilient P2P merchants.
