Nigerian art dealer Ebuka Joseph started using cryptocurrencies last year when business ground to a halt due to COVID-19. Now he is hooked even though the financial authorities disapprove.
“Crypto just allows me to transact freely and within minutes we are done with our transactions,” the 28-year-old told Reuters from a friend’s studio in Lagos where he displays his works.
Nigeria’s Central Bank barred local banks from working with cryptocurrencies in February, warning of “severe regulatory sanctions” and freezing accounts of firms it says are using them.
But according to Reuters, Joseph’s appetite for crypto, like many in Nigeria, has only increased.
For people like him, the clampdown has highlighted the benefits of using currencies outside the central bank’s control, and Nigeria remains the largest market for cryptocurrency trading platforms like Paxful.
Nigerians are turning to crypto for business, to protect their savings as the naira loses value, and to send payments abroad because it is often hard to obtain U.S. dollars, experts and users told Reuters.
In March, just after the central bank ban, the dollar volume of cryptocurrencies sent from Nigeria rose to $132 million, up 17% from the previous month, research firm Chainalysis said. Transactions in June were 25% above the same month last year.
Sly Megida, another artist using crypto to sell his works, said his buyers worldwide readily accept the use of digital currencies and they have also protected his finances.
“The naira is digressing and we are trying to keep the value of the art,” he said, calling crypto “the currency where people don’t think that I am paying too much or too less”.
The Paxful peer-to-peer platform that Joseph uses experienced a 57% rise in trading volume in Nigeria in the year to June, while user numbers surged 83%.
Exchange Yellowcard, which has adopted the peer-to-peer model in Nigeria since February, told Reuters that use “has continued to absolutely skyrocket”.
Both Paxful, which has opened an office in Abuja to lobby the government to change its attitude to crypto, and Yellowcard said Nigerians generally turn to crypto for business rather than speculation.
Chainalysis, in a report last month on African crypto, said the central bank ban locked most Nigerians out of traditional crypto exchanges, so many shifted to a peer-to-peer system.
This goes via platforms such as Paxful or Local Bitcoins, which vet both parties. But other users just exchange crypto for Nigerian naira or other currencies with people they find on WhatsApp or Telegram.
As a result, Chainalysis said Nigeria’s crypto use is likely even higher than its figures suggest.
Risks remain, however. In August, the central bank froze the accounts of some crypto users for allegedly sourcing funds from illegal foreign exchange dealers, leaving many companies that use cryptocurrencies reluctant to talk about it.
Joseph, though, is undeterred.
“You can sell to people outside the country, and they can actually pay in different currencies, which you can always convert,” Joseph said.
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