Bitcoin’s Ungovernability Spooks Nigerian Authorities

Nigeria's crypto rise defies a crackdown; banks barred from crypto services; Dorsey urged donations.

Cryptocurrency adoption in Nigeria is rising, despite restrictive measures by authorities, The Guardian reports.

A range of factors has contributed to this, including political repression, currency-control measures, and runaway inflation, the publication notes.

According to the UsefulTulips service, Nigeria ranks only behind the world’s largest economy — the United States — in Bitcoin P2P trading volume. In the past seven days the country’s figure stood at $9.6 million.

According to Chainalysis, the value of cryptocurrency acquired by Nigerians in May 2021 was $2.4 billion, and in December the figure stood at $684 million.

In February the government forbade commercial financial institutions from providing services to cryptocurrency exchanges and companies dealing with digital assets.

This followed the largest protests in decades against police brutality, notably the SARS unit. The EndSARS protests in October were violently crushed, and authorities imposed financial sanctions on civil society organizations, protest groups and private individuals who raised donations to support demonstrators. Their bank accounts were blocked.

Twitter CEO Jack Dorsey, a well-known advocate of the first cryptocurrency, urged users at the time to donate bitcoins to those harmed by police brutality in Nigeria.

Donate via #Bitcoin to help #EndSARS 🇳🇬 https://t.co/kf305SFXze

— jack (@jack) October 14, 2020

One of Nigeria’s feminist organizations whose accounts were blocked for supporting the protests began accepting payments in digital gold and has raised $150,000.

Adevunmi Emorova, founder of the political organisation Gatefield, which previously allocated grants to journalists covering the protests, commented:

«I think EndSARS was a key catalyst for some of these government decisions. It caused fear. They saw, for example, that people can choose to bypass state structures and institutions to mobilise. That triggered a wave of shock, and those waves endure».

A representative of another civil society organisation affected by government sanctions told the publication that digital assets have become a kind of insurance for them.

«We keep some funds in cryptocurrency — not too much, but enough, like an insurance policy. When the ban happened, we were fortunately able to pay salaries. Hence, in such a situation we would have the opportunity to make payments to employees», he said on condition of anonymity.

According to a representative of the Luno cryptocurrency platform, the ban proved a painful blow for the industry, but users gradually found ways around it. In addition to moving to P2P platforms, they began actively using trading opportunities through groups on social networks.

«The government gradually realises that cryptocurrencies cannot be banned. They know they cannot stop this. It is outside their control, and they fear being in a position they are not used to», said the head of one of Nigeria’s crypto-trading platforms that faced persecution.

In March the Central Bank of Nigeria stated that it did not ban local residents from buying and selling Bitcoin; the restrictions apply to financial institutions only.

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