Nigerian Cash Limits See Bitcoin 61% Above Spot Prices

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(Kitco News) – Demand for Bitcoin (BTC) in Nigeria has skyrocketed in the wake of the collapse in the value of the naira (NGN), the country’s fiat currency, and limitations placed on the amount of cash citizens can withdraw. from ATMs. by the Central Bank of Nigeria (CBN).

At the time of writing, the price of one BTC on the Nigerian crypto exchange NairaEX is 17.5 million NGN, or $38,010. This equates to a 64% premium over Bitcoin’s current market price of $23,175.

The prices are even higher for Nigerians who do not wish to use a centralized exchange, as some sellers on the LocalBitcoins peer-to-peer exchange are offering one BTC for a price of 28.17 million NGN, or roughly $61,190. That is 164% above the current spot price.

Nigeria was one of the first countries in the world to launch a central bank digital currency (CBDC), and CBN launched eNaira in October 2021.

Since its launch, public acceptance of the new CBDC has been lackluster, with only 0.5% of Nigeria’s population using the digital naira in their daily lives as of November 2022. This prompted the central bank to implement limits. withdrawal on the amount of cash citizens can take out of their bank accounts in an attempt to push his “Cashless Nigeria” policy and increase the use of eNaira.

Under new laws that came into force on January 9, citizens can only withdraw a maximum of 20,000 naira (about $43.50) from ATMs per day, with a weekly limit of 100,000 naira (about $217). The CBN also issued new naira notes with the intention of curbing inflation and money laundering.

Nigerians originally had until January 24 to exchange their old, higher-denomination banknotes for the new currency, but limitations with its distribution resulted in an extension of that deadline. On Sunday, the CBN announced that it would extend the deadline to redeem the old naira notes by 10 days to “allow more people in rural communities to exchange the old notes,” according to CBN Governor Godwin Emefiele.

Nigerians now have until February 10 to hand in 1,000, 500 and 200 naira notes. After that date, naira holders will have an additional seven days to deposit old notes directly into the CBN. After that date, all remaining old invoices will be void.

Also contributing to the high premium in Nigeria is the recent change in the price of Bitcoin, which has resulted in an increase in Google searches for BTC in Africa’s largest economy, making it the leading country for Bitcoin web searches according to data. from Google Trends.

Last Thursday, the Central Bank of Nigeria announced the launch of a new national card scheme meant to challenge foreign cards like Mastercard and Visa as it seeks to enhance its cashless society goal and save on foreign transaction fees.

According to Emefiele, the aim of the new “AfriGo” card scheme is to increase the level of access of the Nigerian population to banking services, which they have historically lacked.

“Challenges that have limited the inclusion of Nigerians include the high cost of card services as a result of the currency requirements of international card schemes and the fact that existing card products do not address the local peculiarities of the market. Nigerian,” Emefiele said.

The Bitcoin premium in Nigeria previously peaked at around 36% in February 2021 after CBN banned financial institutions from servicing crypto exchanges.