Stakeholders may have a lot more to gain than fear from a regulated cryptocurrency environment in Nigeria, according to digital currency provider, Luno. The benefits could include building consumer trust in the space and unlocking investment opportunities for players and government.
The Nigerian cryptocurrency market – particularly peer-to-peer transactions – is considered one of the biggest in Africa.
In 2017, it was the second largest peer-to-peer bitcoin market in the world after China. Some local exchange operators told BusinessDay recently that the first of 2018 has seen a spike in transactions. On the LocalBitcoins platform volume of transactions has consistently been above 1.2 billion. This is despite recording significant drops in price of the digital currency.
As a matter of fact, the cryptocurrency market has recorded a loss of over $17 billion in 24 hours as at June 22, triggered by the loss of major cryptocurrencies including bitcoin, Ethereum, Ripple, Bitcoin Cash, and EOS.
In Nigeria, platforms such as Remittano and Luno are seen as controlling the largest share of the unregulated market. The Central Bank of Nigeria (CBN) is at variance with the space, given its self-confessed little knowledge of how the space works. Hence, it set up a team in 2017 to understudy the market and come up with recommendations for regulations.
Although some experts believe regulating the market could be near impossible given the anonymous nature of cryptocurrencies, Owenize Odia, country manager of Luno said regulation will be a positive development.
Most countries see regulation of the space as critical to protect investors fund from scams, prevent anti-money laundering and reduce the increasing number of cyber theft the cryptocurrency market has seen lately.
Some experts have noted that before regulation, authorities have to consider that the size of the market is less than what is projected in the news headlines. This is because there is a danger of seeing the threat of cryptocurrencies as being greater than they actually are which will destroy the benefits.
The entire cryptocurrency market is less than 1 percent of global GDP. Hence it is important that authorities take their time to study the market for a while, understand it before applying the brakes where necessary.
Luno’s country manager told BusinessDay that when eventually regulation arrives, investors who have before now shy away from committing capital will be more confident to invest. Regulation, she says, will provide more clarity in the market and help players protect their business as well as the consumers.
“At Luno, we are already self-regulating in preparation for when the CBN releases its guidelines for the market. There are checks we have put in place to ensure that our customers’ transactions are protected,” Odia said.
