Grassroots Cryptocurrency Adoption in Nigeria

In recent years, Nigeria has emerged as one of the most fascinating case studies in cryptocurrency adoption globally. With a volatile macroeconomic environment, limited financial access, and a digitally native population, Nigeria and its people have embraced crypto as both a response to systemic shortcomings and a driver of grassroots innovation. As of 2024, Nigeria ranked second globally in crypto adoption. Despite initial government resistance, crypto usage thrives, offering valuable lessons for other emerging markets grappling with similar challenges.

Background

Nigeria, Africa’s most populous country, runs a $363 billion economy but struggles with chronic macroeconomic instability. Inflation surged to over 24 percent in 2023, and since 2016, the naira has lost more than three-quarters of its value against the US dollar. Unemployment remains high, especially among youth, and strict capital controls limit access to global currencies.

Furthermore, about 36 percent of Nigerian adults remain unbanked, while many others are underbanked, relying on cash or informal systems. Traditional banking infrastructure is unevenly distributed, and foreign remittances can carry fees of up to 8 percent per transaction. In this challenging environment, Nigerians have turned to alternative financial tools like cryptocurrency.

Why crypto?

Cryptocurrency adoption in Nigeria has been a grassroots solution to structural problems. Many Nigerians have turned to digital assets like Bitcoin and stablecoins because they offer an alternative way to store value, access foreign exchange, move money across borders, and participate in the digital economy.

One of crypto’s most prominent roles in Nigeria is as a hedge against inflation and currency devaluation. As the naira’s purchasing power eroded, citizens sought to preserve the value of their savings by holding assets denominated in stronger, more stable currencies. Stablecoins are digital assets pegged to stable reserves, offering fast, borderless transactions without the volatility of traditional crypto tokens. USD-backed stablecoins like USDT and USDC have become particularly popular, allowing Nigerians to digitally dollarize their savings without relying on scarce physical dollars or costly black-market exchanges.

Cryptocurrencies also solve cross-border payment issues. Nigeria receives billions of dollars in remittances annually, but sending money through traditional corridors like Western Union or banks can be slow, expensive, and burdened by capital controls. Crypto allows users to receive remittances almost instantly at a fraction of the cost. With a smartphone and internet connection, users can access crypto wallets and trade peer-to-peer (P2P) without ever needing a formal bank account.

The rise of P2P platforms like Paxful and Binance P2P has been central to growth. These platforms allow users to exchange naira for crypto directly with one another, bypassing the commercial banking system. Nigerians use these networks to trade digital assets in a way that is fast, flexible, and often more favorable than official rates.

Government response

Nigeria’s government initially responded to the rise of cryptocurrency with sharp resistance. In February 2021, the Central Bank of Nigeria (CBN) issued a directive prohibiting banks and financial institutions from dealing with cryptocurrency exchanges or facilitating crypto-related transactions. The move effectively severed the link between Nigeria’s formal banking system and its rapidly growing crypto economy. According to the CBN, the ban was intended to protect the financial system from risks related to money laundering, terrorism financing, volatility, and capital flight.

Rather than halting crypto activity, the ban drove adoption further underground. Nigerians simply shifted to P2P platforms, where they could continue trading crypto using bank transfers or cash without the need for centralized exchanges. Crypto trading volume remained resilient and in some cases even grew. In effect, the ban removed transparency and pushed users away from regulated institutions, limiting the government’s ability to monitor, tax, or manage the digital asset space.

In response, the government pivoted. In October 2021, the CBN launched the eNaira, a state-backed central bank digital currency. The goal was to offer a regulated, sovereign digital alternative to public cryptocurrencies, promoting financial inclusion and reducing reliance on volatile private tokens. However, the eNaira struggled to gain traction. Despite publicity, adoption remained minimal: By mid-2023, only 13 million wallets had been created in a country of over 200 million people. Many users found little reason to switch to a centralized digital currency that offered no real advantage over existing banking apps, especially when trust in government financial institutions remained low.

By late 2023, amid rising international pressure and recognition of crypto’s staying power, the CBN began to soften its stance. In December 2023, it lifted the ban on crypto transactions in the banking system. New guidelines allow banks to open accounts for licensed cryptocurrency firms, provided that those firms are registered.

This shift culminated in the 2025 passage of the Nigerian Investment and Securities Act, which recognized digital assets as securities under Nigerian law. The legislation provides a legal framework for regulating crypto exchanges, platforms, and service providers, which enables the government to tax and supervise what had become a major sector of the informal economy.

Lessons

Nigeria’s cryptocurrency story is one of necessity-driven innovation. Faced with high inflation, a depreciating naira, and limited financial inclusion, Nigerians turned to crypto as a practical alternative. For other emerging markets grappling with currency instability, high remittance costs, capital controls, or exclusion from the global financial system, Nigeria serves as a powerful case study. It demonstrates that when citizens find value in decentralized tools, they will adopt them, regardless of whether the state endorses or prohibits them.

The key lesson: If adoption is organic and widespread, governments should not rush to ban it. Doing so risks losing visibility, driving the market underground, and alienating a digitally literate population. Instead, regulators should focus on integrating crypto safely into the financial system while addressing the root causes that led people to seek alternatives in the first place.

About the author

Parth Mehta, who earned a Master of Science in Business Analytics from the Samuel Curtis Johnson Graduate School of Management in 2025, completed his undergraduate studies at the University of Texas at Austin, majoring in business with a minor in computer science. He has an extensive background in blockchain, data analytics, and venture capital and is the chief technology officer of a private equity firm focused on healthcare investments.

All views expressed in articles published on the Emerging Markets Institute webpage are those of the author(s) and should not be taken as reflecting the views of the Emerging Markets Institute.