Notwithstanding the ban on cryptocurrency trading by the Central Bank of Nigeria (CBN), between July 2023 and June 2024, Nigeria is said to have contributed an estimated $59 billion to the virtual currency.
KPMG, in a joint report with blockchain analytics firm, Chainalysis, has, therefore, advised the country to embrace blockchain technology and collaborate with cryptocurrency firms instead of keeping them at a distance.
The report, obtained by The Guardian revealed that crypto assets are transforming the financial landscape in sub-Sahara Africa, as it accounted for roughly $125 billion, with Nigeria contributing $59 billion.
It stated that Nigeria’s leading position in the sub-Sahara region is likely influenced by the populace’s use of crypto to combat economic challenges, as 85 per cent of the total crypto value received by Nigeria’s local exchanges was through small denomination retail and professional sized transactions under $1 million.
“This signals the real-world utilisation of crypto, especially in the day-to-day transactions, rather than as an investment alternative.”
The report stated that the high costs associated with cross-border transactions via traditional finance channels might have driven many Nigerians, both domestic and in the diaspora, to leverage crypto for a faster and more cost-effective remittance alternative.
KPMG and Chainalysis noted that the 2021 ban on trading of crypto led to unintended side effects. The report stated that the ban did little to stem the growth and popularity of crypto in Nigeria, instead, the percentage proportion of global crypto value flowing into Nigeria since 2021 has been on the rise.
The report advised that a recent shift towards regulation and integration could potentially offer advantages for both traditional banks and crypto companies.
According to the firm, by collaborating with blockchain companies and products, banks gain much-needed exposure to technological innovation.
It encouraged financial institutions to maximise blockchain technology’s capacity to improve legacy-monitoring systems with one that “far exceeds traditional monitoring capabilities.”
However, it stated that as crypto adoption continues to grow, bad actors are also leveraging its underlying technology for illicit gains.
According to the report, crypto-related scams and fraud have always been and continue to be a global challenge; with crypto scam revenues reaching $10 billion in 2024, a conservative estimate that would likely increase as crypto scam revenue data is updated overtime.
Of the $10billion crypto scam revenue, it stated that pig-butchering and high-yield investment scams accounted for 83.4 per cent of the crypto scam revenue in 2024. (Guardian)
