LAGOS, Oct. 12 (Reuters) – Nigerian art dealer Ebuka Joseph started using cryptocurrencies last year when business stalled due to COVID-19. Now he’s addicted, even though the tax authorities disapprove of it.
“Crypto only allows me to trade freely and within minutes we are done with our transactions,” the 28-year-old told Reuters from a friend’s studio in Lagos, where he exhibits his work.
The Nigerian central bank banned local banks from working with cryptocurrencies in February, warned of “severe regulatory sanctions” and blocked accounts of companies that allegedly use them.
But Joseph’s appetite for crypto, like many in Nigeria, has only increased.
For people like him, the crackdown has exposed the benefits of using currencies outside the control of the central bank, and Nigeria remains the largest market for cryptocurrency trading platforms like Paxful.
Nigerians are turning to crypto for business to protect their savings as the naira depreciates and to send payments overseas because it is often difficult to get US dollars, experts and users told Reuters.
In March, shortly after the central bank’s ban, the dollar volume of cryptocurrencies sent from Nigeria rose to $ 132 million, 17% more than the previous month, research firm Chainalysis said. Transactions in June were 25% up on the same month last year.
Sly Megida, another artist who uses crypto to sell his works, said that his buyers around the world have willingly accepted the use of digital currencies and have also protected his finances.
“The naira is wandering and we’re trying to preserve the value of the art,” he said, calling crypto “the currency that people don’t think I’m paying too much or under”.
Paxful, the peer-to-peer platform Joseph uses, saw trade volume in Nigeria increase 57% in the year through June, while user numbers increased 83%.
Exchange Yellowcard, which has been rolling out the peer-to-peer model in Nigeria since February, told Reuters that usage “has continued to skyrocket”.
Both Paxful, which opened an office in Abuja to encourage the government to change their attitudes on crypto, and Yellowcard said that Nigerians generally turn to crypto for business rather than speculation.
Chainalysis said in a report on African crypto last month that the central bank ban banned most Nigerians from traditional crypto exchanges, leaving many to switch to a peer-to-peer system.
This is done via platforms such as Paxful or Local Bitcoins, which both parties check. But other users simply exchange crypto for Nigerian naira or other currencies with people they find on WhatsApp or Telegram.
As a result, Chainalysis said Nigeria’s crypto usage is likely to be even higher than the numbers suggest.
However, risks remain. In August, the central bank froze some crypto users’ accounts for allegedly withdrawing funds from illegal forex dealers, something many cryptocurrency-using companies were reluctant to talk about.
Joseph is not deterred, however.
“You can sell to people outside the country, and they can actually pay in different currencies that you can convert anytime,” said Joseph.
Reporting by Chijioke Ohuocha and Libby George; Additional coverage from Angela Ukomadu; Adaptation by Giles Elgood
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