- Title: Crypto trading thrives in Nigeria despite official disapproval
- Date: 12th October 2021
- Summary: VARIOUS OF MEGIDA'S NFT PLATFORM SHOWING HIS WORK ''SUPERHERO''
- Embargoed: 26th October 2021 11:08
- Keywords: COVID-19 lockdown Nigeria's Central Bank Paxful peer-to-peer platform cryptocurrency tradiing platforms digital assets
- Location: LAGOS AND ABUJA, NIGERIA
- City: LAGOS AND ABUJA, NIGERIA
- Country: Nigeria
- Topics: Africa,Currencies/Foreign Exchange Markets,Economic Events
- Reuters ID: LVA002EYUST3R
- Aspect Ratio: 16:9
- Story Text: 27-year-old Nigerian Sly Megida has been producing artwork since 2017.
Like a growing number of Nigerian artists, Megida is selling his pieces on cryptocurrency platforms after COVID-19 lockdowns made traditional exhibitions difficult.
Experts and users like Megida told Reuters they are using crypto for business, to protect their savings as the naira loses value, and to send payments abroad because it is often hard to obtain U.S. dollars.
''The naira is digressing and we are trying to keep the value of the art, so cryptocurrency is currently going on the right direction and the world is jumping on it because we are in a digital world like I said. Crypto is just something good for the art to move forward, so that is the currency where people don't think that I am paying too much or I am paying less,'' he told Reuters.
Nigeria's Central Bank barred local banks from working with cryptocurrencies in February, warning of "severe regulatory sanctions" and freezing accounts of firms it says are using them.
But the appetite for crypto in Nigeria seems appears to have increased.
In March, just after the central bank ban, the dollar volume of cryptocurrencies sent from Nigeria rose to $132 million, up 17% from the previous month, research firm Chainalysis said. Transactions in June were 25% above the same month last year.
For people like him, the clampdown has highlighted the benefits of using currencies outside the central bank's control, and Nigeria remains the largest market for cryptocurrency trading platforms like Paxful.
Lorreta Bala is a crypto enthusiast learning the ropes at the Paxful Educational center where people are thought how to trade in the different cryptocurrency coins.
''I'm just beginning to realize how late I am joining the crypto market, this is one thing that has already gone far but I feel it is not too late. Crypto is the future, digital currency is the future, everything is going digitalized now and I think it is something we really need to roll with,'' Bala said.
Ray Youssef is the co-founder and chief executive officer of Paxful.
"Everything begins with education, what we are seeing is that Nigerian people are exceptionally hungry and receptive of this education. It is only in Africa that when you start talking about cryptocurrency not as a means of investment or speculation, but as a means of exchange that people get really excited. What we have seen is that Nigerian youths have built their own businesses offering financial services for their friends and family,'' he said.
Ebuka Joseph sells pieces for various artists. He also turned to cryptocurrency due to COVID-19 lockdowns.
He said he has clients around the world now who pay with crypto for the art and delivery costs.
''Çrypto just allows me to just transact freely and within minutes we are done with our transactions, especially for my art. Someone just ordered today and the payment was really swift, I just sent him my Paxful wallet and they made payment so it is always freedom, it gives me the freedom to transact with anyone in any part of the world,'' the 28-year-old told Reuters.
The Paxful peer-to-peer platform that Joseph uses experienced a 57% rise in trading volume in Nigeria in the year to June, while user numbers surged 83%.
Exchange Yellowcard, which has adopted the peer-to-peer model in Nigeria since February, told Reuters that use "has continued to absolutely skyrocket".
Both Paxful, which has opened an office in Abuja to lobby the government to change its attitude to crypto, and Yellowcard said Nigerians generally turn to crypto for business rather than speculation.
Chainalysis, in a report last month on African crypto, said the central bank ban locked most Nigerians out of traditional crypto exchanges, so many shifted to the peer-to-peer system. This goes via platforms such as Paxful or Local Bitcoins, which vet both parties.
Some users just exchange crypto for Nigerian naira or other currencies with people they find on WhatsApp or Telegram. As a result, Chainalysis said Nigeria's crypto use is likely even higher than its figures suggest.
Risks remain, however.
In August, the central bank froze the accounts of some crypto users for allegedly sourcing funds from illegal foreign exchange dealers, leaving many companies that use cryptocurrencies reluctant to talk about it.
Lamido Yuguda is the Director General at the country's Securities and Exchange Commission.
''There is a lot of opacity in the way the funds are kept and the way the trading is done, and I think quite a few cases that have been a little high profile in recent times were people charged with the management of keeping assets or cryptocurrency exchanges actually carted away with the money of the investor, or where some people have actually hacked these exchanges and made away with investors assets. So there is a huge risk in this particular market,'' he told Reuters.
Megida though, said he obeys the law but is undeterred in his approach of turning his work into crypto-friendly digital assets known as non-fungible tokens (NFT).
''We need this cryptocurrency so we just have to stay away from the restrictions the government just kept, but there are other ways to go about it and Paxful has been able to help us on that medium with the peer-to-peer.''
(Production: Angela Ukomadu, Nneka Chile, Seun Sanni, Abraham Achirga) - Copyright Holder: REUTERS
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