SEC upbeat over Nigeria’s growing cryptocurrency market now at $400m

Joy Agwunobi

The Nigerian cryptocurrency market has witnessed explosive growth, with a market value estimated to be in excess of $400 million, making it a subject of keen interest for domestic and international stakeholders. The substantial growth of the market has not gone unnoticed, prompting observers to closely monitor the sector’s development.

Emomotimi Agama, the director general of Nigeria’s Securities and Exchange Commission (SEC), disclosed that the Nigerian cryptocurrency market had reached a market value of over $400 million during the 2024 annual conference of the Association of Capital Market Academics of Nigeria (ACMAN). The conference, titled “Crypto Assets and the Nigerian Economy: Implications for Financial Markets Regulation”, highlighted the far-reaching effects of cryptocurrencies on the Nigerian economy and financial markets.

Experts have pointed out that cryptocurrencies, with their secure and transparent nature, provide an alternative to traditional banking, reducing the risk of fraud and fueling their adoption in Nigeria. This has resulted in the rapid growth of the cryptocurrency market, with a significant impact on financial inclusion, particularly in rural areas where access to traditional banking services may be limited. The accessibility of cryptocurrencies through smartphones has prompted many Nigerians to adopt digital currencies, which has significantly increased financial participation and inclusivity among the population, irrespective of their geographic location or socioeconomic status.

Dwelling on this sentiment, Agama highlighted the optimistic prospects for Nigeria’s cryptocurrency market, estimating that the market volume will grow to $52.5 million by 2028, representing a 12.66 percent increase from 2024. Agama cited reports indicating that Nigeria’s crypto transaction volume had reached $56.7 billion between July 2022 and June 2023, showcasing a year-over-year growth of nine percent. According to him, the positive trajectory of Nigeria’s cryptocurrency market signals immense potential for growth and increased financial inclusion across the country in the years ahead.

Speaking further, the SEC DG confirmed that approximately 33.4 percent of Nigerians either own or use cryptocurrencies, which highlights an opportunity to extend financial services to the estimated 38 million unbanked adults in the country. Agama stated that this high adoption rate among Nigerians presents an opportunity to integrate the unbanked population into the financial system and enable greater financial inclusion. Furthermore, he noted that cryptocurrencies could provide an affordable and efficient means of remittance for Nigerians in the diaspora, which could significantly boost the Nigerian economy by reducing costs and increasing the speed of remittance transfers.

“Cryptocurrencies can reduce remittance costs, with Bitcoin transactions lowering fees by up to 50%. As one of the largest recipients of remittances in Africa, Nigeria stands to benefit greatly from this technology. Cryptocurrencies offer a more efficient and cost-effective way for Nigerians abroad to send money home. Traditional remittance fees are often prohibitively high, but cryptocurrencies provide a cheaper and faster alternative,” he said.

While recognising the many benefits of cryptocurrencies, Emomotimi Agama also acknowledged that the sector is not without its challenges. He specifically highlighted the concerns raised by Nigeria’s Economic and Financial Crimes Commission (EFCC) regarding the potential for crypto-related scams, which has been a growing concern for regulators and law enforcement agencies.

Agama underlined that regulatory uncertainty, security concerns, and lack of financial literacy are significant impediments to the wider adoption of cryptocurrencies in Nigeria. He noted that the absence of a comprehensive regulatory framework for cryptocurrencies has created uncertainty, discouraging both investors and innovators from participating in the market. He also cited cybersecurity threats, such as hacking and fraud, as major concerns that pose substantial risks to the safety and security of cryptocurrencies.

Agama further observed that the absence of financial literacy among a significant portion of the population makes them susceptible to scams and risky investments, which could undermine the potential benefits of cryptocurrencies. He noted that while crypto assets present significant opportunities for Nigeria’s economy, a balanced regulatory approach is imperative to maximise their benefits while minimising risks. He stressed that the involvement of all stakeholders, including regulators, industry players, and the public, is critical in formulating effective regulations and fostering a safe and innovative financial ecosystem.

The event also featured a speech by Mairiga Katuka, chairman of the Securities and Exchange Commission, who remarked that the advent of cryptocurrencies offers a significant opportunity for Nigeria’s financial markets. He called for stakeholders to work together to develop a roadmap for the country’s thriving financial sector, leveraging the benefits of cryptocurrencies while addressing the challenges that they present.

Katuka highlighted the potential of a collaborative effort in creating a robust and agile capital market, one that aligns with the president’s vision of transforming Nigeria into a prime investment destination.

The SEC chairman  underscored the importance of a shared commitment to the success of the capital market, urging stakeholders to work together to build a market that not only meets current needs but also anticipates and proactively addresses future challenges.