April 19, 2024
Nigeria's eNaira Stumbles on Adoption Path, Crypto Ban Emerges as Key Obstacle
Policy & Regulation

Nigeria’s eNaira Stumbles on Adoption Path, Crypto Ban Emerges as Key Obstacle

In a recent interview, Nigerian tech and innovation legal expert Chinedu Albert shed light on the challenges faced by the eNaira, the Central Bank of Nigeria’s digital currency (CBDC). According to Albert, the 2021 ban imposed by the Central Bank on regulated financial institutions servicing crypto exchanges has significantly hindered the adoption of the eNaira.

Albert described the eNaira as a lofty idea that represents the government’s response to its “ill-advised” blanket ban on cryptocurrencies and other virtual assets. Despite Chainalysis ranking Nigeria high in the Global Crypto Adoption Index in 2021, reflecting the demand for currencies unaffected by government policies or inflation, Albert argued that the eNaira lacks the crucial shielding element found in cryptocurrencies, contributing to its low adoption.

A 2022 study by crypto exchange KuCoin revealed that many Nigerian citizens have turned to cryptocurrencies as a viable alternative to store and transfer assets. The naira, the nation’s fiat currency, reportedly lost 23% of its value in the third quarter of 2023, prompting local investors to consider deflationary assets like Bitcoin.

Albert emphasized the lack of faith among Nigerians in the naira and the central body that controls it. He suggested that the adoption of the eNaira would only happen when the government gains the trust of the people, and the naira attains a more trusted status.

Released on October 25, 2021, as Africa’s first CBDC, the eNaira has been open to everyone for transactions. However, a May 2023 IMF report revealed that there were approximately 14,000 eNaira transactions weekly, representing only 1.5% of total wallets. This indicates “disappointingly low adoption,” with 98.5% of wallets remaining unused weekly.

Despite the Central Bank lifting the ban on digital assets for Nigerian banks and financial institutions on December 23, the CBN and its eNaira still grapple with a trust deficit. Past actions, including the ban on crypto, closure of crypto-linked bank accounts, forex manipulations, and the recent redesign of the naira, have left a negative impression on many Nigerians regarding the Apex Bank and its policies.

The road to widespread adoption of the eNaira appears challenging, requiring the Central Bank to address the trust deficit and demonstrate its commitment to fostering a favourable environment for digital currencies in Nigeria.

Image: Wallpapers.com

Related posts

Policy Executive Urges Developers: Make Code Immutable to Avoid Legal Risks

Harper Hall

Hong Kong’s JPEX Crypto Exchange Scandal Deepens: Masterminds Still at Large

Harper Hall

CFTC Files Complaint Against Former Voyager Digital CEO for Deceptive Practices

Henry Clarke

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More