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Nigeria has recently tightened control over bitcoin’s use. However, Bitcoin interest in the country remains strong despite the government’s efforts there.
Government’s Crackdown Efforts
Last week, the Central Bank of Nigeria (CBN) issued a circular to banks and other financial institutions requiring them to take certain actions relating to digital currencies. Citing money laundering and terrorism financing, the CBN requires banks to “ensure that you do not use, hold, trade and/or transact in anyway” in digital currencies. Banks also must ensure that their digital currency exchange customers “have effective AML/CFT controls” to allow them to comply with customer identification, verification and transaction monitoring requirements. If in doubt, the relationship with those exchanges and customers should be discontinued immediately. Specifically naming “Bitcoin, Ripples, Monero, Litecoin, Dogecoin, Onecoin,” and similar products, the Bank reiterates that they are not legal tender in Nigeria.
On the same day, the Nigerian Securities and Exchange Commission (SEC) also made its own announcement regarding digital currencies. The SEC warned the public against investing in them, specifically naming bitcoin alongside Swisscoin and Onecoin, on which Bitcoin.com recently reported. “The public is hereby advised to exercise extreme caution with regard to digital (cryptocurrencies) as a vehicle of investments,” the SEC Nigeria announced.
Bitcoin’s Interest Remains Strong
Meanwhile, Bitcoin’s interest has been growing in Nigeria, as shown in the increase in the number of online bitcoin-related searches, rising from almost non-existent to the country with the most searches for the word bitcoin in the entire world. The U.S. in comparison ranks 21st with only 13 percent search volume compared to Nigeria within a 12-month period, according to Google Trends.
From January 12th, when the CBN and the SEC made their announcements, Bitcoin’s interest in terms of online searches trended down. Nigeria still remains the number one country for bitcoin-related searches. While some search terms are related to the MMM bitcoin scheme, most search terms are bitcoin-specific interest such as ‘create bitcoin wallet’, ‘bitcoin to naira’ and ‘bitcoin to dollar,’ as well as various bitcoin exchanges and Localbitcoins.
Even if the government eventually bans bitcoin, there is evidence from other countries that interest could end up spiking after such a ban, as shown in the case of Bangladesh and Bolivia. Both countries banned bitcoin in 2014. By 2016, bitcoin interest had skyrocketed, according to Google Trends.
Meanwhile, Nigeria’s inflation rate has been increasing sharply to over 18 percent and forecasted to rise higher according to Tradingeconomics. The trend could also have contributed to rising bitcoin’s interest in the country.
Adoption Still Small, but Should Rise
While there is certainly interest, “Adoption is still small compared to some other markets, but it’s definitely growing fast,” Marcus Swanepoel, CEO of the largest bitcoin exchange in Nigeria, Luno, told Bitcoin.com. According to Coinhills, daily trading volume on Luno, formerly BitX, was 224 bitcoin and 117 on Localbitcoins at press time, placing Naira the 16th most traded currencies for bitcoin.
“People appear to be using it for the same things they use it in other countries, including simply buying it as an alternative store of wealth or to hedge against local currency fluctuations, which is something that we’ve seen happen a lot in emerging markets,” Swanepoel noted.
In the near future, Swanepoel does not believe that bitcoin will become the dominant mobile money in Nigeria.
“It’s way too volatile and there is still a lot of regulatory uncertainty around it, people still need to be able to access and learn about it easier. We are working on solving all of those problems but it will take some time,” he said.
Do you think Nigeria’s Bitcoin interest will continue to rise? Let us know in the comments section below.
Images courtesy of: Stream Africa, Luno, CBN, SEC Nigeria, Google Trends, Tradingeconomics. Reference: Needham & Company’s ‘Economic and Financial Turmoil Driving Bitcoin Interest & Adoption’.
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