Nigerians Look to P2P Exchanges After Crypto Ban
Some Nigerians plan to continue using bitcoin (BTC) and other cryptocurrencies despite a directive issued by the Central Bank of Nigeria (CBN) last week ordering banks to close down accounts associated with cryptocurrencies. Some users think they can get around them by not using centralized exchanges.
“Bitcoin is peer-to-peer, meaning that it can be transacted without intermediaries. Your bank may be able to shut down your account but no one can shut down your bitcoin wallet. This development, while concerning, will not be the end of bitcoin in Nigeria,” said Nigerian Bitcoin Core contributor Tim Akinbo on Twitter.
Exchanges such as Binance have been affected because payment partners that store the naira are no longer willing to deal with them due to the directive, putting an indefinite pause on naira deposits to exchanges.
But there’s an alternative: peer-to-peer transactions, where two users connect directly to each other to trade cryptocurrency. In return for bitcoin or other cryptocurrencies, a user might make a bank transfer directly to the other user, or pay that person with cash. Platforms such as Paxful and a Binance’s peer-to-peer platform help connect users to other users so they can coordinate these transactions.
“As we all know, [peer-to-peer] can’t be stopped,” one trader in Nigeria, Lucky, told CoinDesk.
Despite CBN’s directive, several sources in Nigeria told CoinDesk they plan to continue trading bitcoin via peer-to-peer exchanges, and more aired similar conclusions on social media.
“Most people will return to [peer-to-peer] transactions, some will leverage several alternatives that connect crypto to legacy financial systems, like reloadable Visa or Mastercard. Most will simply use crypto as a choice reserve asset. […] A lot of activities will also go clandestine, or underground,” said developer and cryptocurrency educator Chimezie Chuta.
He added he plans to use “alternative channels” to remain a part of the cryptocurrency community.
Crypto exchange Bundle made a similar comment in a statement to its customers about moving to “alternative channels” to ensure they can still buy and sell cryptocurrency. The email stated the exchange will provide more information about how this will work in the coming days.
CBN did not respond to an inquiry from CoinDesk by press time about whether these alternatives are lawful.