Nigerian cryptocurrency startups lose out on deals as US, African firms position for dominance | Ripples Nigeria
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Nigerian cryptocurrency startups lose out on deals as US, African firms position for dominance

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It has been cricket sound in the cryptocurrency space in Nigeria since the Central Bank of Nigeria (CBN) clamped down on the market in the first week of February.

As the lockdown lingers, another American firm is positioning to make the most of the booming bitcoin sector.

The CBN ordered banks to shutdown any accounts linked to cryptocurrency exchanges in Nigeria, and warned lenders against working with startup platforms that trade bitcoin and cryptocurrency.

This move is killing investment into the digital asset segment of the Nigerian tech space. Within few years, Nigeria had grown to the world stage for bitcoin users (trading $400 million worth of cryptocurrency), ranking ahead of Canada, United Kingdom, and other developed countries, including African countries, with just United States ahead in 2020.

This growth and prominence among global market for bitcoin was unravelling revenue opportunities for venture capitalists in Nigeria. Bitcoin and other cryptocurrency exchanges were gradually getting the attention needed to attract capital from deep pockets before CBN put off the light.

The world is moving on without Nigeria

This move disrupted the local crypto market, affecting any ongoing deals and preventing future ones. One example is that of Jack Dorsey, Twitter founder, and Rapper cum businessman, Shawn “Jay Z” Carter, which was announced on February 12, 2021.

Dorsey and Jay Z decided to partner with ‘Btrust’ to grow the popularity of bitcoin in Africa through capital investment worth 500 bitcoin ($23.6 million) as down payment, but the apex bank is standing in the way of this financial opportunity and many others unknown.

With all the Nigerian cryptocurrency exchanges like Quidax, BuyCoin, Bundle, YellowCard, NairaEx and others banned, there are no businesses to put the investments into, except these exchanges switch focus to other African region to remain relevant.

So like a river whose path is blocked, crypto investments will flow to other African and foreign countries ready for the future of digital currency.

With the crypto market’s door locked in Nigeria, it is open in the United States, where another deal is about to be sealed between Riot Blockchain Inc. and Whinstone U.S Inc.

READ ALSO: After cryptocurrency ban, Nigerian govt moves against fintech firms trading foreign stocks

Riot has offered $651 million to acquire the North America’s largest Bitcoin hosting facility. This deal is expected to strengthen Riot’s dominance in the cryptocurrency market where it mines and create a global industry leader.

As Nigerian crypto exchanges in the cryptoeconomy have their hands tied as deals pass them by, a U.S exchange company, Coinbase, has grown so big, it is planning to attract more capital by conducting its initial public offering next week.

Another deal that has happened within the shutdown of Nigeria’s cryptocurrency market is that of PayPal, which acquired Israeli cryptocurrency startup, Curv.

Nigeria losing market to other African countries

As of 2018, South Africa-based Luno Exchange, accounted for 1.5 million customers in over 40 countries worldwide, but now has 6 million customers. African countries are also tapping into the cryptoeconomy through remittance.

Abra operates in Malawi and Morocco, GeoPay operate in South Africa, Zimbabwe has BitMari.

Nigeria’s first unicorn tech firm, Flutterwave, that had started supporting the crypto market since 2020, had to put a stop to their acceptance of bitcoin as donation or payment following the ban.

The United Nation had written in 2018 “Africa could be the next frontier for cryptocurrency.” This was not farfetched, as Nigeria became the second largest for cryptocurrency in the world.

Several investment gurus have advised the CBN governor, Godwin Emefiele, to allow Nigerian cryptocurrency market continue to operate while studying the volatility and uniqueness to protect investors.

Vice President Yemi Osinbajo and Financial Derivatives boss, Alfred Rewane, pushed for a better positioning of the market in order to prevent Nigerian crypto space from missing deals and other opportunities in the crypto economy, but the CBN has remained an albatross.

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