The Nigerian fintech sector has opened up diverse ways to keep the cryptocurrency running with several innovations. The recent clampdown on cryptocurrency established a chance for invention within the fintech industry as new crypto trading models are developed.
On February 5, the Central Bank of Nigeria (CBN) issued a ruling instructing all financial institutions to stop the facilitation of all transactions involving cryptocurrencies. It also goes further asking all the regulated bodies to identify individuals or organizations engaging in cryptocurrency transactions within their system and shut down their accounts with immediate effect. Finally, the circular note that failure to adhere to the directives will attract severe regulatory sanctions on the part of the regulated entity.
Let’s face it, cryptocurrency is a big deal in Nigeria. In the last couple of years, there has been astronomical growth in cryptocurrency trading in the country. Nigeria is Africa’s largest cryptocurrency marketplace and second only to the United States in Bitcoin trading volume in the world. According to data from QZ Africa, an estimated $400 million worth of cryptocurrency was traded in the country last year. Also, in a recent survey of 74 countries by Statista Global Consumer Survey, Nigerians were the most likely to acknowledge to use or own cryptocurrency.
This latest crackdown on cryptocurrency by CBN was met with huge outrage and sparked controversy among the general public as people debated what the ruling would mean for the country’s financial institution especially the burgeoning Nigerian fintech sector.
How’s the Nigerian Fintech Sector Ecosystem
Nigeria’s Fintech ecosystem has experienced buoyant growth in recent years and has continued to attract renewed interest among foreign investors. According to the West African Startup Decade Report, the bustling Nigerian fintech sector raised more than $600 million in foreign investment between 2014 and 2019. These numbers amount to 25 percent of the total $490 million raised by African tech startups in 2019 alone. Additionally, Fintech companies also raised $55 million in the first quarter of 2020, all from foreign investments.
Most of the Fintech companies in the country offer cryptocurrency remittance services on their platform which allow users to buy bitcoin and other cryptocurrencies, save and invest, facilitate payment transactions, convert digital assets in Naira, and many more.
In a country characterized by strict foreign exchange policy, difficult and exorbitant transaction fees when transferring money in and out of the country, millions of people turn to cryptocurrency to facilitate cheap and fast transactions. Fintech companies such as Buycoin, Piggyvest, Risevest, and many more are thriving on this front, facilitating millions of dollars worth of transactions daily, by fostering a new wave of crypto-based solutions for old financial challenges.
What’s the reaction of the FinTech Sector?
The Central Bank’s latest directive was met with immediate compliance by all Fintech platforms across the country. Almost immediately after the Central Bank releases the circular, major Fintech companies that offer cryptocurrency processing options on their platform including Flutterwave, Buycoin, and Piggvest amongst others notified their customers of the removal of virtual accounts hosted with Deposit Money Banks (DMBs). They also made it known that they will no longer process cryptocurrency transactions via naira deposit. Thus, they are disabling the option in line with CBN’s directive.
These announcements led to huge panic among the public as people scampered to withdraw their funds from these Fintech platforms. This is despite continued reassurance of the safety of people’s money by these companies.
This article is sourced from:https://www.premiumtimesng.com