The Nigerian economy is a great representation of the future for emerging economies. As a result, crypto trading in Nigeria is and will continue to be a huge market.
Cryptocurrency is already popular in Nigeria, with one local trader noting that “Nigerians love Bitcoin.” According to nairametrics, Nigerians traded close to 40 million dollars worth of bitcoin in June 2021 alone despite the ban by the CBN.
In order to successfully engage in forex trading in Nigeria, it’s important that you have an understanding of how the country-specific volatility affects your trading strategy and risk level. One notable example is the CBN ban. Bitcoin on its own is also very volatile and its volatility fluctuates over time. Bitcoin moves can feel quite extreme when they move.
When Bitcoin moved from the $150 plus to the $300’s in November 2013 for instance, that move was about 100%. Bitcoin moves in large chunks when it moves in a certain direction, for example, when Bitcoin price moved from $64,800 to $30,000 between April 14th and May 19th.
For forex trading and trading in general, traders need to be aware of these market movements and plan their strategies accordingly. Softwares can help a trader make better decisions when they are subject to price volatility.
The CBN Ban
The CBN is not happy with crypto trading in Nigeria. The Nigerian Federal High Court sitting in Abuja granted the request of the Central Bank of Nigeria to freeze accounts belonging to technology trading platforms offering local and foreign stocks including Bamboo Systems Technology Limited, RiseVest Technologies Limited, Trove Technologies Limited, and Chaka Technologies Limited, for 180 days.
In February 2021, The Central bank of Nigeria told banks and other financial institutions to close all accounts dealing in cryptocurrency or facilitating payment for cryptocurrencies., with immediate effect.
As a result, banks that offer services to cryptocurrency exchanges like Luno, Nairaex and Coindirect implemented the enforcement of the CBN ban.
Luno, Nairaex, and Coindirect, among others continue to appeal to the courts for an exception. When the initial ruling was made, a statement from the CBN in February outlined a further clarifying position in response to the confusion generated by a court review of its earlier order.
According to Sapam Directories Limited digital currency is not legal tender in Nigeria. The CBN said that cryptocurrency is not legal tender and does not have any value or means of exchange.
So how Does Crypto trading currently work in Nigeria?
Since you can no longer withdraw or deposit money into your crypto account of some leading platforms, you have to rely on peer-to-peer (P2P) transactions.
What is Peer to peer P2P in Binance?
What is Binance? Binance is a crypto exchange platform, providing a place to trade coins. Crypto trading in Nigeria can be as simple as using your Binance account to buy and sell coins with other users.
Challenges of crypto trading in Nigeria
The CBN ban is a huge challenge for crypto traders in Nigeria. If you have a bank account outside Nigeria, consider using it to deposit funds so as to circumvent the CBN ban.
The current challenges of crypto trading in Nigeria can be summarized as follows:
Peer-to-peer transactions are tedious; this was not the case with most platforms before the CBN ban. You can now sell cryptocurrencies at Binance or any other platform like Bitmex and convert your coins to Naira, but it takes time.
Fraud is rife. The fraud claims are not just limited to Nigerian fraudsters, but also Chinese and Indian fraudsters are involved in Nigerian cryptocurrency fraud cases.
The transparency of the market is poor. Truly transparent platforms are hard to come by, so you have to be very confident about your ability to monitor your account at all times.
Transactions can take a long time to be processed because many orders end up being canceled or not made at all because of high transaction fees incurred by exchanges like Binance.Related: High demand skills that can help you earn money
Common Cryptocurrencies traded in Nigeria
Bitcoin (BTC) is the most common cryptocurrency in Nigeria. It is followed by Ethereum (ETH), Litecoin (LTC), Monero (XMR), and Dash (DASH). Many Nigerians also trade in stablecoin like Tether (USDT) and True USD. These stablecoins can be converted to Naira, which is how the CBN ban is bypassed.
Although the CBN ban is a big challenge, cryptocurrency trading in Nigeria is still very exciting. In spite of the CBN ban, Nigerians have been trading in thousands of dollars worth of cryptocurrencies every day. There’s no doubt that as long as there are enough users to use P2P transactions the market will remain a hotbed for crypto trading activity in Nigeria.