Although Nigerians involved in FX transaction prefer using crypto due to ease and speed, analysts argue that crypto is not responsible for the BDC’s shutdown
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Nigerian currency traders, commonly referred to as Bureau De Change (BDC) operators, have declared the closure of their businesses in Abuja due to the lack of access to Fiat USD, as reported by local media. The operators cited the emergence of crypto peer-to-peer (P2P) platforms as a contributing factor to their challenges.
Nigerian Web3 legal representative and analyst Kue Barinor Paul refutes this claim saying that “The Nigerian cryptocurrency peer-to-peer (P2P) market is not accountable for the shutdown of the nation capital’s Bureau De Change (BDC) chapter”.
Paul said that cryptocurrency’s impact on Nigeria’s foreign exchange (forex) market is minimal. He explained that the Bureau De Change deal in physical fiat, whereas crypto transactions are carried out online with digital assets like stablecoins, hence, there’s no direct competition between the BDCs and the crypto space.
Blaming the crypto P2P market for the liquidity issues faced by BDC dealers serves as a diversion from addressing the genuine underlying problems. Paul emphasized that factors like price volatility and the country’s excessive reliance on imports are the primary contributors to the USD shortage, eclipsing the influence of the crypto P2P market.
As a result of the ban imposed in 2021 by the Central Bank of Nigeria (CBN), Nigeria has emerged as the largest P2P market globally. Hitting a P2P transaction volume of around $56billion between July 2022 and June 2023.
In December 2023, a circular was issued to banks, revoking the ban on cryptocurrency transactions, thereby allowing Nigerian banks to facilitate such transactions once again but transactions through P2P remains the best alternative for converting crypto to fiat in Nigeria.
It’s important to highlight that many Nigerians engaged in foreign exchange (FX) transactions face challenges when using traditional banking services. Presently, the fees for transferring foreign currency are notably higher in the banking sector compared to the crypto market, rendering crypto P2P a more convenient alternative.