Nigeria is one of the largest and most active markets for cryptocurrency in Africa, with over $400 million worth of transactions in 2020, according to Chainalysis. However, the Nigerian government has recently taken a hostile stance towards crypto, banning banks from servicing crypto exchanges, blocking access to crypto websites, and detaining executives of Binance, the world's largest crypto exchange.

Why is Nigeria targeting crypto?

The official reason given by the Nigerian authorities is that crypto is being used for illicit activities, such as money laundering, terrorism financing, and currency manipulation. The Central Bank of Nigeria (CBN) claims that crypto poses a threat to the stability of the naira, the national currency, and the security of the nation.

However, some analysts and observers suggest that there are other motives behind the crackdown, such as political repression, economic control, and social unrest. Crypto is seen as a tool for Nigerians to bypass the government's restrictions on foreign exchange, remittances, and capital flight, as well as to express their dissatisfaction with the status quo.

For instance, crypto played a significant role in the #EndSARS protests in October 2020, when Nigerians used Bitcoin and other cryptocurrencies to fund the demonstrations against police brutality, after the authorities froze the bank accounts of the organizers. Crypto also enables Nigerians to access global markets, opportunities, and innovations, without relying on the government's approval or intervention.

Who is affected by the crackdown?

The crackdown has affected millions of Nigerians who use crypto for various purposes, such as trading, investing, saving, sending, and receiving money, as well as accessing decentralized applications and platforms. Many Nigerians have reported difficulties in accessing their crypto funds, withdrawing their naira balances, or verifying their identities on crypto exchanges.

The crackdown has also affected the crypto industry in Nigeria, which has been growing rapidly in recent years, attracting local and international players, such as Binance, Luno, Paxful, and Bundle. The industry has been forced to adapt to the new regulations, by suspending naira deposits and withdrawals, switching to peer-to-peer (P2P) models, or relocating to other jurisdictions.

The most dramatic case was the detention of two Binance executives, who were invited by the Nigerian government to discuss the crypto situation, but were intercepted and questioned by the Office of the National Security Adviser (ONSA) upon their arrival. The ONSA accused Binance of operating illegally in Nigeria, moving $26 billion worth of untraceable funds, and evading taxes. The executives have not been charged, but their passports have been seized, and they are still under investigation.

What is the future of crypto in Nigeria?

The future of crypto in Nigeria is uncertain, as the government has shown no signs of easing its stance, and has even announced plans to invite and quiz more crypto operators in the country. The government has also expressed interest in developing its own digital currency, the e-naira, which would be issued and controlled by the CBN.

However, the crypto community in Nigeria has not given up, and has been resisting and challenging the crackdown, through legal actions, public campaigns, and innovative solutions. Many Nigerians have continued to use crypto, despite the risks and difficulties, by leveraging P2P platforms, VPNs, and other alternatives. Some crypto advocates have also called for dialogue and collaboration with the government, to educate and inform the authorities about the benefits and potentials of crypto, and to seek a more favorable and conducive regulatory environment.