The 2021 Central Bank of Nigeria (CBN) ban on crypto transactions dealt a significant blow to Nigeria’s thriving crypto industry, forcing many startups to shut down or pivot. Companies like Bitfxt, LocalBitcoins, and Paxful were particularly hard hit, as banks closed their accounts, effectively locking them out of the financial system overnight.
Before the ban, crypto startups thrived, with Bitfxt enabling Nigerians to buy crypto with Naira. However, intense competition from global exchanges like Binance and Huobi, a shortage of local blockchain talent, and funding challenges already strained these local firms. The CBN ban exacerbated the situation, pushing the sector underground. By 2021, 26 out of 42 crypto startups in Nigeria either shut down, were acquired, or changed their business models.
Despite this, some startups adapted by pivoting to peer-to-peer (P2P) platforms that allowed users to trade directly with each other. Companies like Roqqu, Quidax, and Busha introduced innovative P2P models to survive the harsh regulatory environment. Others like Payourse and Flux shifted to remittance services, while Roqqu and Yellow Card sought international licenses to continue operations.
In December 2023, Nigeria lifted the crypto ban, and by August 2024, the Securities and Exchange Commission (SEC) issued provisional licenses to some startups. However, regulatory uncertainty remains a challenge, with banks still cautious about engaging with crypto firms. For surviving startups, the future lies in bridging traditional finance with decentralized finance (DeFi) while maintaining strict compliance standards.
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