KPMG Advocates Blockchain Integration for Nigerian Banks
KPMG has called for Nigerian banks to embrace blockchain and collaborate with cryptocurrency firms to exploit digital finance opportunities. Despite past regulatory restrictions, Nigeria’s cryptocurrency inflows have grown significantly. The firm emphasizes blockchain’s potential to transform banking practices and calls for precautions against crypto-related scams as the sector evolves.
KPMG has urged Nigerian banks to adopt blockchain technology and establish partnerships with cryptocurrency firms, emphasizing the need to move beyond their cautious stance towards digital finance opportunities. This recommendation is timely, as global cryptocurrency adoption is increasing and Nigerian regulatory agencies are beginning structured engagement with the cryptocurrency sector.
The firm’s March 2025 report, titled “Crypto Risk and Opportunities in Nigeria: A New Banking Paradigm,” highlights the lingering impacts of the Central Bank of Nigeria’s (CBN) 2021 ban on cryptocurrency transactions. According to data from Chainalysis, the ban had minimal effect on reducing cryptocurrency usage and paradoxically corresponded with a rise in Nigeria’s share of global crypto inflows.
Between July 2023 and June 2024, the Sub-Saharan Africa region saw $125 billion in on-chain crypto transactions, with Nigeria contributing $59 billion. The high cost of traditional remittance channels has pushed many Nigerians, including those abroad, towards cryptocurrencies for more affordable and swift cross-border transactions.
In 2024, Nigeria’s cryptocurrency inflows demonstrated a noteworthy resilience, rebounding by 25%. Several external factors, such as penalties for banks breaching CBN regulations and currency devaluation, influenced these trends. However, crypto-related scams have emerged as a significant issue, netting $10 billion globally. KPMG emphasized the need for increased vigilance amidst ongoing risks that provoke regulatory scrutiny.
In light of the sector’s resilience, Nigerian regulators are adapting their approaches. Key initiatives, such as the CBN’s guidelines for Virtual Asset Service Providers (VASPs) and the SEC’s Accelerated Regulatory Incubation Program (ARIP), reflect a strategic shift toward engagement and clearer regulatory standards.
KPMG highlights that blockchain technology could transform Nigerian banking practices. By integrating blockchain analytics into compliance systems, banks can enhance their ability to identify illicit activities, boost operational efficiency, and branch into new financial services. “Forward-thinking banks can position themselves at the forefront of an increasingly digital financial system by leveraging blockchain technology,” the report suggests, indicating that such innovations can improve competitiveness in the nascent digital economy.
In summary, KPMG’s report stresses the necessity for Nigerian banks to embrace blockchain technology and collaborative efforts with cryptocurrency firms amidst evolving digital finance landscapes. The report emphasizes both the sector’s resilience despite regulatory challenges and the imperative to combat crypto-related fraud. By adapting to these changes, Nigerian banks can enhance their operational strategies and competitiveness in the digital economy.
Original Source: nairametrics.com
