The Central Bank of Nigeria has used another tactic to push its citizens towards a cashless society that has led to a sharp increase in the price of Bitcoin in the country. The shift to a digitized economy has led people to turn to the flagship cryptocurrency for daily transactions.
The price of one Bitcoin (BTC) on the Nigerian NairaEX crypto exchange is currently 17.8 million Naira. This is equivalent to $38,673 at the official exchange rate.
The Central Bank of Nigeria extends the deadline for the return of old series of 200, 500 and 1000 naira notes from January 31, 2023 to February 10, 2023, to allow the collection of more old notes… https:/ /t.co/HkT4ES90vK pic.twitter.com/hrdS4bJqbe
— Central Bank of Nigeria (@cenbank) January 29, 2023
It represents a 63% premium to the market price of BTC at $23,603. However, most of the Nigerian population reportedly only have access to the black market dollar rate, which is around 700 naira to the dollar. This is the same dollar equivalent price that is displayed on most cryptocurrency exchanges in the country, including Binance and Bybit.
The exchange rate on LocalBitcoins has hit a whopping $62,000, marking a significant 162% premium. The central bank issued a notice restricting cash withdrawals last month. The maximum over-the-counter (OTC) cash withdrawal per week was limited to NGN 100,000 for individuals and NGN 500,000 for corporations.
Citizens were allowed to withdraw a maximum of 20,000 ($43.4) NGN in a day with a weekly limit of 100,000 ($217) NGN. These restrictions came into effect earlier this month on January 9, just before the circulation of the new Naira notes. Speculation took the front seat as some claimed the government’s decision was aimed at combating inflation and money laundering.
Initially, citizens had until January 31 to exchange their old tickets for new ones, but the deadline has been pushed to February 10. The development comes as demand for the leading digital asset has continued to rise in Nigeria due to the government’s decision to impose limits on cash withdrawals at banks and ATMs in an effort to achieve a cashless economy.
Meanwhile, this is not the first time bitcoin has been trading at a premium in Nigeria. In early 2021, when the central bank banned financial institutions from servicing cryptocurrency exchanges, BTC was trading at a 36% premium.
Following the Nigerian government’s move to achieve a cashless economy, thereby limiting the availability of cash, there has been a growing interest in BTC among Nigerians in recent months.
According to data from the Google Trends analysis platform, investors in Nigeria are increasingly interested in buying bitcoins than investors in the United States.
#Bitcoin it’s hope‼️
LAST MINUTE: 🇳🇬 Bitcoin is selling at a 60% premium in Nigeria ($37,235) due to increased demand.
🇳🇬 The Central Bank of Nigeria started limiting cash withdrawals to $44 per day earlier this month.
— SHIB Bezos (@BezosCrypto) January 29, 2023
In December, the central bank of Nigeria imposed a weekly withdrawal limit of 100,000 naira ($217) and 500,000 naira ($1,085) for individuals and corporate organizations, respectively. The bank added that withdrawals above this limit would attract processing fees of 5% for individuals and 10% for corporate organizations.
At the same time, the regulator stated that it had set the maximum cash withdrawal per week via ATM at 100,000 naira ($217), subject to a maximum cash withdrawal of 20,000 naira ($43) per day. The policies became effective on January 9, 2023.
This is not the first time that the Bitcoin premium has risen in Nigeria. In February 2021, the central bank banned regulated financial institutions from providing services to cryptocurrency exchanges. This decision led to a 36% increase in the BTC premium at the time.
Additionally, earlier this month, the Central Bank of Nigeria released a report outlining the regulatory framework for stablecoins and initial coin offerings (ICOs) in the country. However, most of the content belonged to eNaira, the digital currency of the Central Bank of Nigeria (CBDC).
Despite becoming the first African country to launch a CBDC in October 2021, Nigerians refused to embrace the central bank initiative.
Interestingly, the Central Bank registered 270,000 eNaira wallets in August 2022. However, it was found that Nigerians preferred to transact using stablecoins like Tether. [USDT]. But with cashless policy in the offing, the nation’s financial regulator expects citizens to increase their use of eNaira.