A report from Chainalysis has identified Nigeria as a global leader in cryptocurrency adoption, ranking second in the 2024 Global Crypto Adoption Index. This trend is largely attributed to the country's economic challenges. The report was released on October 17.
According to Chainalysis, Nigerians are increasingly using cryptocurrency for everyday transactions such as bill payments, mobile phone credit top-ups, and retail purchases. This marks a shift from viewing crypto solely as a speculative investment to recognizing its practical utility in daily life. Stablecoins like USDT and USDC are particularly significant in Nigeria's crypto economy, comprising approximately 40% of all stablecoin inflows in Sub-Saharan Africa. These stablecoins provide a hedge against inflation and naira depreciation while facilitating cross-border payments and remittances more efficiently than traditional methods.
The report also highlights Nigeria's prominent role in decentralized finance (DeFi) adoption within Sub-Saharan Africa. Over $30 billion has been received by DeFi services in the past year, with Nigerians utilizing these platforms for earning interest, taking out loans, and engaging in decentralized trading. This surge in DeFi activity reflects a demand for greater financial access and control amid inadequacies in traditional financial systems.
Nicholas Anthony, a policy analyst at the Cato Institute's Center for Monetary and Financial Alternatives, commented on the Nigerian government's stance towards cryptocurrency. He said that the government is "looking for anything other than its own actions to blame" for the naira's devaluation and has pointed fingers at cryptocurrency, particularly targeting Binance. Anthony described Nigerians' use of cryptocurrency as "a symptom, not a cause, of the naira’s failure," attributing it to "years of currency mismanagement." He noted that tensions escalated after February's crash of the naira when Bayo Onanuga, an advisor to President Bola Tinubu, suggested banning crypto to prevent further currency devaluation.
Concerns have also been raised by Nigerian lawmakers regarding President Bola Ahmed Tinubu’s approach towards the crypto industry. According to Premium Times, policymakers have questioned claims that crypto companies impact foreign exchange rates and criticized the detention of a Binance employee by the government as potentially damaging Nigeria's image.
Chainalysis provides data, software, and research services globally to organizations including government agencies and cybersecurity firms. The company's data supports compliance efforts and investigations and has been instrumental in high-profile cybercrime cases.
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