Post-Ban Lift: Nigeria’s Crypto Exchanges vs. P2P Merchants Showdown
The Central Bank of Nigeria (CBN) has made a pivotal move, lifting the restrictions on banks facilitating cryptocurrency transactions.
This significant shift marks a turning point for Nigeria’s crypto landscape, sparking anticipation within the community while signaling a potential clash between crypto-fiat exchanges and peer-to-peer (P2P) merchants.
The ban enforced by the CBN initially compelled Nigerian banks to abstain from aiding crypto transactions, inadvertently empowering P2P merchants. Rather than eradicating Bitcoin and crypto use, the ban catalyzed a surge in peer-to-peer trades and direct payments among community members.
Nathaniel Luz, co-founder and CMO of Flincap, expressed his optimism to Cointelegraph, viewing the ban lift as a significant boon for the industry. Luz emphasized that this move signifies Nigeria’s readiness to accommodate and foster the growth of crypto businesses within its borders.
Highlighting the imminent competition, Luz emphasized that institutional exchanges should now gear up for a dynamic Nigerian market. The absence of these exchanges during the ban period led to a dominance of P2P trading, potentially at the expense of other crypto businesses.
“The landscape is evolving rapidly; it’s a survival game now, with crypto-fiat exchanges and P2P merchants vying for dominance in what could become the world’s largest crypto P2P market,” Luz remarked.
When questioned about the potential deterrent effect of SEC registration requirements on exchanges eyeing Nigerian operations, Luz acknowledged the challenge for startups but remained bullish about its long-term benefits for the crypto sector.
Drawing parallels to the changes witnessed in the Nigerian banking sector following the 2010 recapitalization policy, Luz highlighted how it led to mergers and acquisitions, ultimately strengthening the banking landscape.
It is worth noting that in February 2021, the CBN had instituted a ban preventing regulated financial institutions from servicing crypto exchanges. However, the recent circular signifies a paradigm shift, acknowledging the global surge in crypto demand and adoption, prompting a reassessment of the stringent 2021 restrictions.
The lifting of restrictions by the CBN paves the way for a transformative era in Nigeria’s crypto sphere, setting the stage for fierce competition and potential innovations as various players recalibrate strategies to thrive in this evolving landscape.
