KPMG urges Nigerian banks to adopt blockchain and partner with crypto firms to leverage digital finance opportunities. Despite a 2021 ban on crypto transactions, Nigeria’s crypto inflows increased significantly. Concerns about scams persist, prompting regulatory adaptation. KPMG emphasizes blockchain’s potential to enhance operational efficiency and compliance in the banking sector, calling for vigilance against fraud.
KPMG has urged Nigerian banks to adopt blockchain technology and collaborate with cryptocurrency firms in order to fully benefit from digital finance. This call comes amid increasing global cryptocurrency adoption and a shift in Nigerian regulators toward structured sector engagement. In its March 2025 report entitled “Crypto Risk and Opportunities in Nigeria: A New Banking Paradigm,” KPMG analyzed the effects of the Central Bank of Nigeria’s (CBN) 2021 prohibition on crypto transactions and found that it did not significantly hinder cryptocurrency usage in the country.
Between July 2023 and June 2024, Sub-Saharan Africa saw $125 billion in on-chain crypto transactions, with Nigeria contributing $59 billion. High remittance costs in traditional banking systems are prompting Nigerians, including those living abroad, to turn to cryptocurrencies for more efficient and lower-cost cross-border transactions. Notably, the crypto sector in Nigeria rebounded strongly in 2024, reflecting a 25% increase, despite prior fluctuations and factors such as enforcement penalties on non-compliant banks and currency devaluations affecting adoption.
While the growth in cryptocurrency usage is notable, concerns remain about the prevalence of scams related to crypto. In 2024 alone, global scams linked to cryptocurrency generated $10 billion. KPMG emphasized the need for vigilance amid these risks, which drive further regulatory scrutiny of the sector. In response to the growth and challenges in cryptocurrency adoption, Nigerian regulators have adjusted their strategies, introducing the CBN’s Virtual Asset Service Providers (VASPs) guidelines and the SEC’s Accelerated Regulatory Incubation Program (ARIP) to foster clearer engagement with the industry.
KPMG highlighted the transformative potential of blockchain for Nigerian banks, advocating for the integration of blockchain analytics into compliance structures to enhance detection of illicit activities, improve efficiency, and expand offerings into new financial services. The report remarked, “Forward-thinking banks can position themselves at the forefront of an increasingly digital financial system by leveraging blockchain technology,” underscoring that this innovation could bolster competitiveness in the changing digital economy.
Fraudsters in the crypto space are becoming increasingly sophisticated, raising concerns about security. The EFCC has warned that foreign operatives are training Nigerians in cryptocurrency fraud. According to the Chainalysis 2025 Crypto Crime Report, over the past five years, illicit addresses have received $178 billion in cryptocurrency, peaking in 2022 with $54.3 billion. The figures for subsequent years included $46.1 billion in 2023 and $40.9 billion in 2024, indicating a troubling trend in crypto-related crime.
KPMG’s recommendations highlight the urgent need for Nigerian banks to integrate blockchain technology and partner with cryptocurrency firms to maximize the benefits of digital finance. As the regulatory environment evolves, the banking sector can enhance compliance, operational efficiency, and service offerings through blockchain. However, the risks of crypto-related scams continue to pose significant challenges, warranting increased regulatory oversight and consumer protection measures. Overall, embracing these changes is crucial for banks to remain competitive in a rapidly digitalizing economy.
Original Source: nairametrics.com
