Chemezie Chuta, the founder of Blockchain Nigeria User Group advocates for a collaboration between Nigeria blockchain-based startups and the banks to drive adoption of crypto in the country.
Chuta believes that, “Nigerian Crypto companies and banks can work together, just like Fintech companies are working together with banks.
Agreed, Cryptos and banks have been seen as bitter enemies, which is understandable. The anti-banks sentiment has prevailed ever since the inception of bitcoin, with cryptos posing threat as a substitute for fiats.”
He emphasized the fact that though traditional banks and crypto firms seem to be an enemy of one another, the fact on ground doesn’t support that the banking system will go away anytime soon. A good reason for a collaboration woth blockchain startups in Nigeria.
FinTech 4.0
Though the banking system looks complicated, fragmented or broken, this financial system is still a core part of our financial ecosystem in our society till date.
He advocates for a collaboration between the banks and crypto firms as such convergence will birth to Fintech 4.0 in Nigeria’s financial system.
“Nigerian crypto-assets companies can work together just like FinTech companies are working together with banks”
Chimezie Chuta — Founder and Co-ordinator Blockchain Nigeria User Group.
Considering that Nigeria is the leader in peer to peer Bitcoin transactional trades in Africa, a smooth relationship will keep the market safe with anti-laundering measures and other strategies like Know Your Customer (KYC) measures.
Nigeria is the top country leading in peer to peer Bitcoin transactional trades on the African continent. In Q2 of 2020 alone, Nigeria recorded about $34.4 million dollar volume from blockchain startups and other formal exchanges. This is about 15B NGN from the official exchanges alone.
- Key Highlights: Bitcoin Hits $73,000 for the First Time Since June
- Nigeria External Reserves hits $40.2B
Unofficial transactional volumes from p2p trades on WhatsApp, Telegram Groups, and Facebook easily dominates the above figures.
The Dominance of Stablecoins
He highlighted stablecoins as a major threat to banks, “There has also been a rise of Stablecoin projects in the ecosystem helping crypto traders to easily hedge their funds against market volatility.”
“Stablecoins will definitely play very serious roles in disrupting traditional banks’ influence in the crypto-trading space in the coming years.”
Currently, there are about six offshoots of Naira Denominated StableCoin projects:
- NGNT- Buycoin Africa
- NIRX -Nirxblock
- NGNC -Nairacoin
- ABCD-Bitsika.Africa
- NGNX-KuBitX
- NGNC-Dan Holdings
He suggests that banks look into the following questions to be able to smoothly work with crypto companies.
- What are the barriers or obstacles to further adoption of crypto-related activities in the banking industry?
- How can we bridge the gap between traditional finance and crypto?
- What does crypto need from the banking industry and what does the banking industry need from crypto-assets operators?
- What roles can banks play as custodians where Stablecoins are privately issued?
- For cross-border transactions, can Stablecoin cut settlement times from days to minutes by eliminating the need for middlemen?
Chuta also listed out possible solutions to the problems faced by the banks towards adopting cryptocurrencies. These problems span around anonymity, transparency and inability to control bad actors.
These solutions include:
- Using DLTs to speed up information-sharing between market participants and regulators.
- Bringing cryptocurrencies into the limelight, and encouraging the issuance of central bank digital currency (CBDC). On the plus side, a CBDC would be far superior among government-regulated markets to alternative digital currencies (ADCs) such as Bitcoin, or fiat Stablecoin derivatives.
- Put measures eg. strong KYC, AML etc., that ensure that crypto-assets do not become enablers of criminal activity and tax evasion. Inter-agency collaboration with financial services to implement a coherent, consistent set of controls will help.
“For me, collaboration, not competition, is the true strength here for all involved.”
About Chimezie Chuta
Chuta is an IT Professional & Drupal Web Developer. Trainer @ Lagos DrupalVersity. Founder, BlockSpace.Africa, Founder and Coordinator, Blockchain Nigeria User Group, 3D Printing guy and the lightening network advocate.
