Nigeria’s Growing Interest in USDT Reflects High Demand for Dollars.
Nigeria’s increasing fascination with cryptocurrency assets is strongly linked to its high demand for US dollars, a trend underscored by the surging interest in stablecoins, as indicated by Google search data.
According to Google Trends, Nigeria stands out as a hotspot for USDT, the leading stablecoin globally. Despite ranking fourth on a 12-month scale behind Sri Lanka, Laos, and Cambodia, Nigeria’s interest remains significant.
Several factors contribute to Nigerians turning to stablecoins, including inflation, the devaluation of the naira, and the need for seamless cross-border transactions.
Dollar-pegged stablecoins have become increasingly attractive in regions facing inflation and currency instability, offering a convenient alternative for individuals and businesses.
USDT facilitates remittances and cross-border payments, serving as a vital income source for many Africans. By opting for stablecoins, users can reduce costs, time, and friction associated with traditional banking and money transfer services.
Stablecoins are promoted as an economical means of money transfer and a safe entry point into the Bitcoin ecosystem, boasting transfer fees typically ranging from 0% to 1%.
Despite a recent decline in Bitcoin interest, Nigeria remains Africa’s largest crypto market, with a 9% annual growth rate, according to Chainalysis research. However, it trails behind countries like the United Kingdom, United Arab Emirates, and Brazil in crypto friendliness.
With a population of over 200 million, Nigeria has a youthful demographic, with 43% under the age of 15. The EFiNA 2023 Access to Finance Survey Report reveals a significant uptick in digital financial service usage, from 34% during the lockdown period to 45% in the past year.
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Stablecoins, such as Tether (USDT), USD Coin (USDC), and Binance USD (BUSD), are a class of cryptocurrencies pegged to conventional assets like the US dollar and gold. They offer stability amid the volatility of popular cryptocurrencies like Ethereum and Bitcoin, with a combined market capitalization of nearly $1.1 trillion.
The Central Bank of Nigeria (CBN) plans to recognize stablecoins and initial coin offerings (ICOs) as investment classes, with a forthcoming regulatory framework. The CBN’s “Payment System Vision 2025” research acknowledges the rising popularity of private stablecoins, warranting regulatory oversight.
Nigeria’s financial ecosystem aims to leverage the country’s stablecoin interest by introducing the cNGN, a new stablecoin linked to the Nigerian naira. Designed to benefit token holders and the Nigerian economy, cNGN will be backed by the nation’s fiat currency and compatible with multiple public blockchains, facilitating international transfers and global adoption.
