EXPERT OPINION | 2024 Will See Increased Competition in Nigeria’s Crypto Ecosystem Following Entry of Banks

The recent decision by the Central Bank of Nigeria (CBN) to lift the ban on banks from transacting cryptocurrency-related transactions is expected to bring more life and competition to the ecosystem.

CBN published new guidelines for banks and local financial institutions allowing them to create accounts with virtual asset service providers (VASPs), this brought an end to a ban on them touching cryptocurrencies, which had been in place since 2021.

🇳🇬REGULATION | The Central Bank of #Nigeria Lifts the 2021 Banking Restrictions on Cryptocurrency Exchanges and VASPs

In a circular sent to the banks and financial institutions in Nigeria, the Central Bank (CBN) guided that the new regulation supersedes previous instructions on… pic.twitter.com/FDkUDbDTuh

— BitKE (@BitcoinKE) December 23, 2023

Now the peer-to-peer (P2P) market – once dominant during the ban – is predicted to change with increased banking support. This shift may foster competition and innovation in the Nigerian crypto space. This is according to Oludimu, a Nigerian who works at one of the leading crypto exchanges in Nigeria.

Oludimu anticipates a surge in cryptocurrency usage in Nigeria in 2024, attributing it to the Central Bank of Nigeria’s (CBN) new guidelines and the lifting of the ban on crypto transactions. She emphasized that this directive would contribute to establishing a more structured and regulated environment for cryptocurrency transactions in the country.

The re-entry of banks is also expected to introduce more transaction efficiency.

Highlighting the potential impact of the CBN guidelines, Oludimu stressed that they could foster collaboration between cryptocurrency platforms and traditional financial institutions. This collaboration may open avenues for exploring opportunities within the crypto space, ultimately promoting greater integration and cooperation between traditional finance and digital assets.

A number of African exchanges anticipate a rise in user adoption and engagement, attributing it to the clarity offered by the regulatory framework. This newfound clarity is expected to draw in more individuals and companies to the cryptocurrency space in the coming months, signaling a positive trend for the platforms.

Oludimu added that this strategy involves:

Actively seeking strategic partnerships
Expanding user base, and
Playing a role in advancing Nigeria’s digital assets ecosystem.

Most African crypto exchanges will aim to achieve this by introducing innovative solutions that align with the recently established regulations, thereby contributing to the growth and development of the cryptocurrency landscape in Nigeria.