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As Bitcoin Surges, Nigerians Are Facing Harsh FX-Related Interventions - FORBES

APRIL 09, 2024

BY  Abubakar Nur Khalil

I'm a Nigerian Bitcoiner and CEO of Recursive Capital Follow 

Bitcoin and Nigeria flag on a cracked wall.

Nigerian flag with Bitcoin


As the first quarter of 2024 began, Nigerians were cautiously optimistic about the outlook for the year following the reversal of the Bitcoin ban in December 2023 and the changing stance of regulators towards Bitcoin and other digital assets. However, against the backdrop of the bitcoin price rally and ETF hype, events since late February have taken a drastic turn.


The now-reversed Bitcoin ban of 2021 arguably started a snowball effect, as banning banks from directly tying crypto payments pushed Nigerians to P2P platforms to access Bitcoin and other digital assets. In hindsight, this move, coupled with the Naira's tumultuous track record over the last few years, contributed to Nigeria becoming one of the largest global P2P markets for Bitcoin.

Despite the reversal and push for more clarity on Bitcoin regulation, the dominance and effect of P2P flows have affected the Naira's FX rate by effectively establishing a parallel de facto FX rate that remains much higher than the official rate.

Following the Naira's 70% depreciation, the Central Bank of Nigeria (CBN) decided to free-float the US Dollar peg in June 2023. Earlier this year, the Nigerian government devalued the Naira for the second time in eight months to unify its official and unofficial exchange rates. The aim was to address the chaotic FX rate situation and attract foreign investments.

Official Weighted Average NGN-USD Rate - Nigerian Foreign Exchange Market (NFEM)

Official Weighted Average NGN-USD Rate - Nigerian Foreign Exchange Market (NFEM) 


Naira FX Market Manipulation Allegations

Further, the government has increasingly turned to finding ways to factor in and significantly reduce the effects Bitcoin, stablecoins, and other digital assets speculation have on the Naira's FX rate.

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