Nigeria's Cryptocurrency Market: how to find a compromise?

The specific features of the cryptocurrency market of the African continent demonstrate that new digital financial relations in the region will soon be able to become the basis for changes in economic and monetary policy in many of its countries. We have already talked about this in one of our articles.

As of the 3rd quarter of 2022, Africa is one of the fastest growing cryptocurrency markets among emerging economies and the third fastest growing market in the world. Analysts and experts put Nigeria at the center of the new cryptocurrency system of the region, stimulating the growth of the volume of cryptocurrency transactions in Africa and ranking 6th in the world in terms of the use of a new type of digital financial assets.

A study conducted in mid-2022 by the CoinGecko analytical platform, which included an analysis of Google Trends data on popular cryptocurrency-related queries, showed increased and stable interest in this market in Nigeria relative to other countries of the world.

Data for the "Invest in Crypto" search query in Nigeria. Source: Google Trends.

Data for the “Invest in Crypto” search query around the world. Source: Google Trends

It is estimated that more than 22 million people in Nigeria are the owners of cryptocurrencies. More than a third of Nigerians aged 18 to 60 invest in cryptocurrencies themselves, and the majority of Nigerian investors are under 30 (52% of the total). As in many regions of the world with unstable economies, such an impressive number of crypto enthusiasts among Nigerians is explained by the lack of access to traditional financial services. Add here the depreciation of the national currency and rising inflation, so you will understand that the people of the country have paid special attention to digital assets for a reason.

Despite such interest in cryptocurrencies, the official authorities are skeptical about the situation with the exchange and use of digital money, to put it mildly. Currently, Nigerians are free to do whatever they want with cryptocurrency, including buying and selling, but they cannot use the local banking system for this. In February 2021, the Nigerian Central Bank (CBN) announced that all commercial banks will be banned from participating in any crypto transactions, and therefore there is a high risk of blocking bank accounts involved in the transfer and exchange of cryptocurrencies in the country.

The consequence of the introduction of this law was the growth of digital money exchange points throughout the country and the use of "gray" exchange schemes.

But do not think that the Nigerian government is not looking for ways to solve the problem associated with the spread of cryptocurrencies and their impact on the economy. Just 7 months after the decree banning the use of cryptocurrencies in transactions with bank accounts was issued, the country's government announced the development of its own digital national currency, calling it "an important step forward in the evolution of money" in Africa's most populous country. Nigerian President Muhammadu Buhari said that the digital currency and the blockchain technology used in it can contribute to economic growth and increase the GDP of Africa's largest economy by $29 billion over the next 10 years.

However, financial experts believe that the launch of eNaira is just an attempt to create prerequisites for changing the financial system and introducing cryptocurrencies into it, which are becoming increasingly popular in Nigeria.

In November 2022, the government, together with the central bank, decided to amend the law on investments and securities, adopted more than 15 years ago. It is assumed that it will define new provisions regarding cryptocurrencies and change their official status. Perhaps then the dissonance in the actions of ordinary citizens, for whom the crypt has become a way of preserving capital and the authorities who want to prevent further deterioration of financial stability, will be eliminated. In this case, Nigeria has every chance to further consolidate its position as the African country with the largest number of crypto enthusiasts, for whom investing in digital currencies has long been more than just investing and saving their savings.

IslamicCoin is the first project to provide the community with powerful financial technology that allows for seamless transactions, support innovation and charity. The project is 100% compliant with Shariah law and benefits the community. Developers focus on sustainable development and use technology and innovation to ensure financial sustainability.

"At the heart of Islamic finance is the prohibition on charging interest. Islamic finance has always been focused on not shifting most of the risks to one side of the financial relationship. In Islamic finance, balance and transparency of transactions should be observed, which can negatively affect our society," says Mohammed AlKaff AlHashmi, one of the founders of IslamicCoin.

IslamicCoin is aimed at 1.1 billion Muslims using the Internet. The project creates convenient tools designed for users who have never been owners of cryptocurrencies. Thus, the creators of IslamicCoin are expanding the capabilities of the Muslim online community by providing it with opportunities to use a new form of digital money and involving them in the modern digital world.