KPMG advocates for Nigerian banks to adopt blockchain technology and collaborate with cryptocurrency firms, emphasizing the potential for enhanced efficiency and competitiveness. Despite regulatory challenges, Nigeria’s cryptocurrency market shows significant growth, with the total inflows reflecting resilience. The report also warns of increasing crypto-related scams and highlights the shifts in regulatory behavior to promote structured engagement within the sector.
KPMG has urged Nigerian banks to adopt blockchain technology and collaborate with cryptocurrency firms, moving beyond their cautious stance to capitalize on digital finance opportunities. This recommendation arises amidst growing global bitcoin adoption and a shift in Nigerian regulatory bodies toward structured interaction with the cryptocurrency sector. KPMG’s report, “Crypto Risk and Opportunities in Nigeria: A New Banking Paradigm,” reveals the impact of the Central Bank of Nigeria’s (CBN) 2021 ban on cryptocurrency transactions and provides insights into the dynamics of the market.
The report, based on data from Chainalysis, indicates that despite the CBN’s ban aiming to restrict crypto usage, Nigeria’s global share of crypto inflows increased significantly. Between July 2023 and June 2024, Sub-Saharan Africa recorded $125 billion in on-chain transactions, with Nigeria capturing $59 billion. Rising remittance costs associated with traditional banking systems have prompted both domestic and diaspora Nigerians to utilize cryptocurrency for more efficient cross-border transactions.
Furthermore, Nigeria’s cryptocurrency inflows have displayed notable resilience, with a 25% rebound projected for 2024. However, challenges remain, as external factors—such as penalties on banks for violating CBN regulations and currency devaluation—continue to influence adoption trends.
Notably, the crypto sector’s growth has raised concerns about scams, which globally generated $10 billion in 2024. The prevalence of schemes like pig-butchering and high-yield investment fraud underscores the need for ongoing vigilance, as these risks stimulate regulatory actions. In light of this, Nigerian regulators have revised their strategies, introducing initiatives such as the CBN’s Virtual Asset Service Providers (VASPs) guidelines and the SEC’s Accelerated Regulatory Incubation Program (ARIP), which reflect a proactive approach to regulatory frameworks.
KPMG has accentuated the transformative capabilities of blockchain technology for Nigerian banks, asserting that its integration into compliance frameworks enables banks to effectively identify illicit activities, enhance operational efficiency, and diversify financial services. The report states, “Forward-thinking banks can position themselves at the forefront of an increasingly digital financial system by leveraging blockchain technology,” highlighting that such advancements can boost competitiveness in the evolving financial landscape.
In a previous report by Nairametrics, it was noted that fraudsters are increasingly sophisticated in their methods related to cryptocurrency transactions. The EFCC has raised concerns over foreign nationals training Nigerian youth in cryptocurrency fraud. According to the Chainalysis 2025 Crypto Crime Report published in February, illicit addresses accumulated an alarming $178 billion in cryptocurrency over the past five years, with 2022 witnessing the peak at $54.3 billion, followed by $46.1 billion in 2023 and $40.9 billion in 2024.
In conclusion, KPMG’s insights call for Nigerian banks to embrace blockchain and strengthen ties with cryptocurrency firms amidst an evolving financial landscape. The significant growth of crypto transactions in Nigeria, despite regulatory challenges, highlights both opportunities and risks within the sector. As banks adapt and regulators implement clearer guidelines, the potential for enhanced operational efficiency and competitive advantage through blockchain technology grows, necessitating vigilance against fraudulent activities.
Original Source: nairametrics.com
