Despite Ban, Nigeria Is 2nd On List Of Global Crypto Adoption Index

Despite Ban, Nigeria Is 2nd On List Of Global Crypto Adoption Index
  • PublishedOctober 27, 2023

Despite the ban of the Federal Government of Nigeria on the use of cryptocurrency, the country ranks second globally among the countries with lower middle-income economies, leading to the large scale adoption of the digital currency.

Nigeria is second behind India followed by Thailand in the Chainalysis’ “2023 Global Crypto Adoption Index,” Osun Defender learnt.

According to the blockchain analytics firm, Central and South Asia and the wider Oceania regions take the larger part of the top 10 with six.

However, lower-middle-income countries, identified under the World Bank’s classification of nations by wealth, have shown the strongest recovery in grassroots crypto adoption over the past 12 months.

In February 2021, the Central Bank of Nigeria (CBN) issued a circular to deposit money banks (DMBs), non-bank financial institutions (NBFIs), and other financial institutions (OFIs) to close accounts of persons or entities involved in cryptocurrency transactions within their systems.

The CBN further warned local financial institutions against dealing in crypto-assets or facilitating payments for crypto exchanges.

The apex bank cited concerns over money laundering, terrorism financing, cybercrime and the volatility of cryptocurrencies as reasons for the ban.

Former President Muhammadu Buhari had on May 28, 2023, signed the 2023 finance bill into law. The law introduced a 10 percent taxation of gains on the disposal of digital assets including cryptocurrency, seemingly legalising the reintroduction of the digital currency.

Furthermore, the index shows that worldwide grassroots cryptocurrency falls short of the situation in 2022, due to the dwindling fortunes of FTX.

“In fact, LMI is the only category of countries whose total grassroots adoption remains above where it was in Q3 2020, just prior to the most recent bull market.”

The analysis further highlighted that nations in the LMI category typically have growing industries and populations and account for more than 40% of the world’s population.

“If LMI countries are the future, then the data indicates that crypto is going to be a big part of that future.”

The excerpt also suggests that institutional adoption driven by organizations in high-income countries is gaining pace despite a prolonged bear market. The report also predicts a potential “bottom up and top down” adoption of cryptocurrencies where these assets serve the needs of users from both high-wealth and developing nations.

India remains the largest cryptocurrency market in the region and leads grassroots adoption, according to Chainalysis’ index. It has also become the second-largest crypto market by raw estimated transaction volume globally, ahead of other major economies.

Chainalysis also notes India’s unique tax deducted at source scheme applied to cryptocurrency transactions, which requires a 1% tax be levied for all transactions that must be deducted from the user’s balance at the time of the trade for it to be completed. 

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