Nigerian Crypto Fee Hike Sparks VC Interest Amid P2P Regulatory Hurdles

Nigeria has caught the attention of venture capitalists due to the proposed increase in crypto registration fees. These investors may face difficulties in gaining traction due to government restrictions on peer-to-peer (P2P) platforms that aim to control the promotion of free markets. Youssef, the CEO of Noones, a financial communication and P2P app, believes that the government’s decision to raise the registration fee for crypto exchanges is an invitation for established players like Coinbase to dominate the Nigerian market. The government’s intention is to restrict P2P services to address foreign exchange (FX) challenges, but this conflicts with the strong preference for P2P in the Nigerian crypto market, posing a significant hurdle for exchanges that don’t offer P2P support.

Despite the regulatory challenges, Youssef remains optimistic about Nigeria’s position in the crypto ecosystem. He suggests that the government should view P2P traders as an asset and work alongside crypto stakeholders to leverage cryptocurrencies for the benefit of the nation’s economy. Nigeria currently holds the title of the largest P2P market in the world, a designation that arose after the Central Bank of Nigeria banned institutions from buying and selling crypto in 2021. In December 2023, the government lifted the ban, allowing crypto exchanges to apply for licenses in Nigeria.

Youssef also comments on the partnership between Gluwa and the Nigerian government, which aims to boost the adoption of the nation’s central bank digital currency (CBDC) known as eNaira. He believes that the government could have taken a different approach by using the CBDC to stimulate local economic growth, provide credit to aspiring entrepreneurs, and encourage young people to embrace the stablecoin.

The Nigerian government has often clashed with cryptocurrency exchanges. Binance, for example, will stop operating with the naira on March 8 following government criticism aimed at crypto exchanges. In August 2022, Nigeria was labeled as the most crypto-obsessed country based on the number of Google searches for “cryptocurrency” or “buy crypto.”