Banks in Nigeria are being encouraged by KPMG to adopt blockchain and cryptocurrency companies
In a significant shift for the Nigerian financial industry, traditional banks and cryptocurrency firms are forging closer ties, driven by regulatory clarity and growing market demand.
Six months ago, the Nigerian Securities and Exchange Commission (SEC) expanded its Accelerated Regulatory Incubation Program (ARIP) sandbox to include crypto firms, issuing provisional licenses to two local exchanges - Busha and Quidax. This move marked a turning point in the relationship between traditional finance and cryptocurrency in the country.
Despite the Central Bank of Nigeria's (CBN) earlier ban on crypto-related banking activities, the report states that crypto inflows into Nigeria dipped in 2022 and 2023, but this was a reflection of global market trends rather than a direct consequence of the ban. Surprisingly, peer-to-peer (P2P) trading flourished in Nigeria, making it one of the leading crypto markets globally.
A significant development occurred in December 2023 when the CBN reversed its stance, allowing banks to serve licensed crypto firms. This decision paved the way for increased collaboration between traditional banks and cryptocurrency firms.
Recent developments highlight this increasing collaboration. According to KPMG and Chainalysis insights, Nigerian authorities have shifted from banning crypto-related banking activities to adopting constructive regulatory frameworks. The 2025 Investments and Securities Act formalizes crypto as securities under SEC oversight, fostering a regulated environment where banks and crypto firms can cooperate more confidently.
The rising adoption of stablecoins, particularly USDC and USDT, underpins growing use cases in remittances and domestic payments. Stablecoins accounted for about 40% of Nigeria’s crypto market in 2024, driven by economic factors such as inflation and currency depreciation.
Partnerships like the one between Circle Payments Network (CPN) and Yellow Card exemplify practical collaboration. They enable real-time Naira payouts using USDC stablecoins to reduce remittance costs and processing times significantly compared to traditional banking systems. Nigeria processed roughly $125 billion in on-chain crypto value between July 2023 and June 2024, with expectations for 150% transaction growth in 2025.
Benefits identified include drastic reductions in remittance fees (potentially up to 70% lower), instant settlement speeds, and enhanced access to financial services for gig economy workers and traders. These efficiencies help integrate crypto solutions into Nigeria’s broader financial system and contribute to the economy’s diversification.
Educational initiatives led by regulators and industry players aim to bridge knowledge gaps in banks, facilitating better understanding and seamless integration with crypto ecosystems. This resolves value-chain disconnects and underpins long-term collaboration and innovation.
In summary, the evolving regulatory landscape, increased stablecoin usage, strategic partnerships, and educational drives collectively are transforming Nigeria’s financial sector, aligning traditional banks and crypto firms toward shared digital finance goals identified by KPMG and Chainalysis analyses.
- The Nigerian Securities and Exchange Commission (SEC) expanded its Accelerated Regulatory Incubation Program (ARIP) sandbox to include crypto firms, issuing provisional licenses to Busha and Quidax, marking a turning point in relationships between traditional finance and cryptocurrency in Nigeria.
- In a significant development, the Central Bank of Nigeria (CBN) allowed banks to serve licensed crypto firms, paving the way for increased collaboration between traditional banks and cryptocurrency firms.
- The growing adoption of stablecoins, such as USDC and USDT, in remittances and domestic payments accounts for about 40% of Nigeria’s crypto market, driven by economic factors like inflation and currency depreciation.
- Partnerships between organizations like Circle Payments Network (CPN) and Yellow Card demonstrate practical collaboration, enabling real-time Naira payouts using stablecoins to reduce remittance costs and processing times significantly.
- The evolving regulatory landscape, resulting collaborations, and educational initiatives are transforming Nigeria’s financial sector, integrating crypto solutions into the broader financial system and contributing to the economy's diversification.
