Banks in Nigeria are urged to welcome collaborations with blockchain and cryptocurrency companies, as per KPMG's suggestions.
In a groundbreaking development for Nigeria's financial sector, traditional banks and cryptocurrency firms are forging partnerships that are positively impacting the country's crypto market. This collaboration, as highlighted by professional services company KPMG and blockchain analysis firm Chainalysis, is taking place within a newly clarified regulatory environment.
The 2025 Investments and Securities Act (ISA 2025) officially recognizes digital assets as securities and places crypto oversight under the Securities and Exchange Commission. This regulatory clarity enables traditional financial institutions to engage with crypto firms confidently, fostering innovation and growth in the fintech space.
One of the key benefits of this collaboration is the enhancement of financial inclusion. Digital assets and crypto services provide access to formal financial systems for Nigeria's large unbanked population. The use of stablecoins, in particular, facilitates faster, lower-cost, and 24/7 cross-border payments and settlements, bypassing limitations and costs associated with correspondent banking networks.
Programmable money flows enabled by blockchain smart contracts automate complex payment processes without manual intervention, improving efficiency and transparency. The integration also supports real-world crypto spending through payment cards that link stablecoin wallets to traditional card networks like Visa and Mastercard, allowing Nigerian users to spend cryptocurrency seamlessly in daily commerce.
Partnerships, such as Xend Finance's cNGN stablecoin initiative, demonstrate how crypto-traditional bank collaboration expands investment access and attracts foreign liquidity into Nigeria. This collaboration is driving fintech innovation, financial inclusion, and liquidity expansion, strengthening Nigeria’s digital asset ecosystem and boosting economic participation.
Since 2021, Nigeria's share of global crypto inflows has grown significantly. Despite restrictions, peer-to-peer (P2P) trading flourished, making Nigeria one of the leading crypto markets globally. However, crypto inflows into Nigeria dipped in 2022 and 2023, but this followed global market trends rather than being a direct consequence of the Central Bank of Nigeria's (CBN) ban on banks facilitating crypto transactions.
In December 2023, the CBN reversed its stance, allowing banks to serve licensed crypto firms. The joint publication by KPMG and Chainalysis addressed the unintended consequences of the CBN's 2021 ban on banks facilitating crypto transactions. KPMG encourages financial institutions to maximize blockchain technology's capacity to improve legacy monitoring systems with one that "far exceeds traditional monitoring capabilities."
With these collaborations, Nigeria solidified its position as a leading crypto hub in Africa, with an estimated $59 billion in crypto transactions in 2024 and stablecoins comprising around 40% of the market. The future of Nigeria's crypto market looks promising as traditional banks and cryptocurrency firms continue to collaborate, driving innovation and growth in the fintech sector.
[1] KPMG and Chainalysis, "Nigeria's Crypto Market: Unintended Consequences of the Central Bank of Nigeria's Crypto Ban and the Path Forward," 2023. [2] KPMG, "The Future of Crypto in Nigeria: Collaboration, Regulation, and Innovation," 2023. [3] Xend Finance, "cNGN: The Stablecoin for Nigeria," 2023. [4] Nigerian Securities and Exchange Commission, "Accelerated Regulatory Incubation Program (ARIP) Sandbox," 2023. [5] Central Bank of Nigeria, "Guidelines for the Operation of Payment Service Providers in the Cryptocurrency Industry," 2023.
- The partnership between traditional banks and cryptocurrency firms, as exemplified by Xend Finance's cNGN stablecoin initiative, is fostering innovation and growth in Nigeria's fintech sector, driving financial inclusion and liquidity expansion.
- Since the 2025 Investments and Securities Act officially recognized digital assets as securities, there has been a significant increase in global crypto inflows towards Nigeria's crypto market.
- Programmable money flows, made possible by blockchain smart contracts, are automating complex payment processes and improving efficiency and transparency in Nigeria's financial sector.
- The integration of crypto services with traditional card networks like Visa and Mastercard enables Nigerian users to spend cryptocurrency seamlessly in daily commerce.
- The Central Bank of Nigeria's reversal of its ban on banks serving licensed crypto firms in 2023 had a positive impact on Nigeria's position as a leading crypto hub in Africa, with stablecoins comprising around 40% of the market in 2024.
