The development highlights how millions of Nigerians are increasingly turning to cryptocurrencies and stablecoins as alternatives to conventional financial channels amid persistent economic uncertainties and difficulties accessing foreign currency.

According to industry data, Nigeria now ranks among the most active cryptocurrency markets globally, with digital assets becoming a mainstream tool for remittances, savings, payments and international transfers.

The country’s growing influence in the digital asset ecosystem comes despite years of regulatory uncertainty and crackdowns on some cryptocurrency platforms.

Yet, market activity has remained resilient, driven largely by retail users seeking faster and cheaper alternatives to traditional financial services.

Meanwhile, data from blockchain analytics firm Chainalysis shows that Nigeria recorded approximately $59 billion in cryptocurrency transactions between July 2023 and June 2024, placing it among the world’s largest crypto markets.

Around 85 per cent of those transactions were valued below $1 million, indicating strong participation by individuals and small businesses rather than institutional investors.

Industry operators argue that cryptocurrencies are increasingly being used for practical purposes rather than speculation.

Moyo Sodipo, chief operating officer and co-founder of Busha, said users are beginning to recognise the everyday utility of digital assets.

“People are starting to see the real-world utility of cryptocurrency, especially in day-to-day transactions,” he said.

He further noted that crypto is increasingly being used for bill payments, mobile airtime purchases and retail transactions.

Stablecoins which are pegged to major currencies such as the US dollar, have emerged as a key driver of adoption.

Chainalysis estimates that stablecoins account for roughly 40 per cent of Nigeria’s crypto inflows, making the country the largest stablecoin market in Sub-Saharan Africa.

The growing use of stablecoins has been linked to persistent foreign exchange shortages and the need by businesses and individuals to preserve value in the face of currency volatility.

Chris Maurice, chief executive officer of Yellow Card, said stablecoins provide businesses with access to dollar-denominated assets when conventional channels are constrained.

“About 70 per cent of African countries are facing an FX shortage, and businesses are struggling to get access to the dollars they need to operate,” Maurice said.

Prior to retail payments, digital assets are also becoming increasingly important for remittances and cross-border trade. Industry stakeholders say cryptocurrency-based transfers offer faster settlement times and lower transaction costs compared to traditional channels.

The surge in adoption comes as Nigeria gradually moves towards a more structured regulatory framework for digital assets.

The country has shifted from an era of restrictions to one focused on licensing and oversight, with authorities seeking to balance innovation with consumer protection.

Experts believe that regulatory clarity, combined with growing digital literacy and widespread smartphone adoption, could further accelerate cryptocurrency usage across the country.

However, they also caution that issues relating to consumer protection, fraud prevention, taxation and market stability will remain critical as the sector continues to expand.

For policymakers, Nigeria’s leadership in global crypto transfers presents both an opportunity and a challenge: harnessing innovation to deepen financial inclusion while ensuring adequate safeguards in an increasingly digital financial system.

In the second quarter (Q2) of 2023, the Fear and Greed Index for cryptocurrencies increased from an initial level of around 30 in Q1 to 52 per cent, indicating an improved market sentiment. 

This information was extracted from a report by CoinMarketCap, a digital asset price-tracking platform, which analysed market behaviour during this period. 

The report highlighted several significant events, including the rise of Bitcoin ETFs triggered by BlackRock’s filing for a spot Bitcoin-Traded Fund. Various financial giants such as Ark Invest, Fidelity Digital, Valkyrie, VanEck, and 21 Shares also sought approval for similar Bitcoin ETFs from the US Securities and Exchange Commission. 

The report also highlighted a surge in liquid staking derivatives (LSDs) due to the Ethereum Shapells upgrade in April, where LSD platforms secured over one-third of Ethereum’s total value staked.

Other notable events included the emergence of projects focused on on-chain trading of real-world assets, the introduction of Decentralised Physical Infrastructure solutions, increased usage of Zero-knowledge Sync solutions, and the inception of platforms enabling the restaking of staked ether.

However, the crypto market in second quarter lacked strong market narratives compared to the first quarter, which saw the doubling of Bitcoin’s price, the rise of layer-2 protocols, and a more active non-fungible token (NFT) market. 

Although there was a growing trend in Memecoins and BRC-20 tokens, they did not generate the same level of excitement as in the previous quarter. 

According to the report, the total market cap at the end of Q2 reached $1.17 trillion, representing a 48% year-on-year increase, but most of this growth occurred in Q1.

The report also noted a significant decline in the total spot trading volume of the top 20 crypto exchanges, which dropped by 19.5% from Q1 to 2023 Q2.