Sub-Saharan Africa (SSA) raced to the top of the world as the region with the largest volume of peer-to-peer (P2P) bitcoin transactions, thanks to a major contribution by Nigerians in July.
Nigeria is the second-largest P2P market for bitcoin behind the United States – in July 2021, according to a report by Luno and Arcane Research. This is despite a directive by the Central Bank of Nigeria (CBN) that prohibits financial services to support cryptocurrency businesses and also freeze accounts maintained by exchanges and individuals in the market.
This is not the first time Nigeria is being put behind the US in the P2P market. Paxful earlier in the year noted that Nigeria was the second-largest market for P2P transactions on its platform.
The researchers at Luno and Arcane Research explain that Nigerian authorities are unable to censor cryptocurrencies due to the nature of coins like bitcoin.
“It was difficult for the government to intervene in these transactions, so they tried making bitcoin less appealing by making the markets less accessible. This caused centralised exchanges to lose ground. Meanwhile, the P2P markets thrived as the remaining option,” the report reads.
Throughout the month of July, the global weekly P2P volumes trailed at around $60 million from $93 million recorded on the week of February 15.
However, while the global P2P volumes trend downwards, the SSA P2P volumes have remained stable. Last week saw the P2P trading volumes of SSA become the largest region measured by trading volumes in the P2P markets for the first time, as SSA’s trading volumes surpassed those of Northern America.
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Northern America had seen 181 consecutive weeks as the largest region in terms of P2P trading volumes up until last week when the trading volumes in the region were surpassed by SSA. The last time Northern America was not the dominating region in the market was back in early 2018 when the speculative interest in bitcoin was thriving. Then, Western Europe, Asia, and Eastern Europe saw periods with trading volumes surpassing those of Northern America.
“Back then, speculative mania was leading the volumes to explode. This time around, one could argue that the sustained purchasing demand from the SSA’s is caused by the utility caused by bitcoin’s censorship-resistant nature,” the report notes.
Nigeria may be behind the US in terms of volume of P2P bitcoin transactions, but the country is farther down behind the Northern American economic power in putting controls that guarantee protection for investors in the country. While the US has some levels of controls in place and which have encouraged financial service operators to play in the market, the Nigerian central bank chooses to build its own Central Bank Digital Currency and to keep the crypto market far away from financial services.
Comments by Gary Gensler, chairman of the US Securities and Exchange Commission in which he asked the US Congress to give it more powers to tame the market, rattled the market.
“While I’m neutral on the technology, even intrigued—I spent three years teaching it, leaning into it—I’m not neutral about investor protection,” said Gensler, who on Tuesday gave a speech about crypto at the Aspen Security Forum. “If somebody wants to speculate, that’s their choice, but we have a role as a nation to protect those investors against fraud.”
Gensler is hoping that Congress would grant the SEC power to oversee crypto exchanges in the US. The goals, he said, are to protect the investor, facilitating capital formation, and ensuring fair markets.
