The Nigerian cryptocurrency industry has experienced dramatic highs and crushing lows over the years. One of the most notable cases is Bitfxt, a startup founded in 2017 by Franklin Peters, aiming to provide solutions in crypto payments, cross-border remittances, and digital asset trading.
At its peak in 2019, Bitfxt processed millions of transactions annually. However, a major regulatory shift in 2021 forced the company to shut down, reshaping Nigeria’s crypto landscape.
The 2017 bull market saw Bitcoin rise past $10,000, sparking widespread interest in digital assets. However, buying crypto in Nigeria was a challenge due to the lack of locally tailored exchanges. Many investors resorted to unreliable methods, such as sending money abroad to purchase Bitcoin or relying on WhatsApp groups—both of which were risky and susceptible to scams.
Bitfxt entered the market by offering Nigerians a platform to buy cryptocurrencies using Naira, generating revenue through token listing fees and transaction charges. Despite its efforts, the startup struggled with financial sustainability.
The company also faced difficulties in hiring local blockchain engineers, leading it to employ foreign developers, particularly from India, which added operational costs due to currency conversion. “We were never profitable; we never had extra cash to keep,” admitted Franklin Peters, former founder of Bitfxt and now CEO of BoundlessPay.
By 2020, major international exchanges such as Binance, Huobi, and OKX expanded into Nigeria. With their extensive resources and global expertise, these companies outcompeted local startups by offering lower transaction fees and attracting top blockchain engineers. This made it increasingly difficult for platforms like Bitfxt to survive.
As Bitfxt struggled with funding, a failed investment round in 2020 further weakened its position. Eventually, Peters shuttered Bitfxt, later rebranding it as BoundlessPay in 2021. However, before the platform could establish itself, the Nigerian government imposed a game-changing regulation.
On February 5, 2021, the Central Bank of Nigeria (CBN) issued a directive barring banks from facilitating crypto transactions, forcing them to shut down accounts linked to crypto activities. Overnight, Nigeria’s thriving crypto industry was thrown into disarray. While some exchanges quickly adjusted their business models, the ban proved fatal for Bitfxt, LocalBitcoins, and Paxful—once key players in the market.
Banks became increasingly cautious, viewing cryptocurrency as a high-risk asset class. They were reluctant to support crypto firms due to strict financial regulations, fraud concerns, and the lack of clear legal frameworks. This led to widespread disruptions, with customers facing frozen accounts and restricted access to their digital assets.
By 2021, there were 42 crypto startups operating in Nigeria, including Egoras, Cryptofully, Lopeer, Bitmama, NairaEx, BuyCoins, Fluidcoins, and VIBRA. Due to the regulatory crackdown and liquidity shortages, 26 of these companies either shut down, were acquired, or pivoted to other business models.
Several major players struggled to stay afloat. Lazerpay shut down in 2023, citing regulatory uncertainty, Bundle Africa restructured, ceasing its exchange services, Paxful temporarily left Nigeria, only to return a month later while Helicarrier (formerly BuyCoins) shut down its exchange platform in 2024 due to liquidity issues.
Amidst the regulatory turmoil, some startups managed to adapt. Adaverse-funded Payourse rebranded as Partna, shifting to B2B remittances. Similarly, Y Combinator-backed Flux transitioned from a crypto exchange to traditional remittance services.
As Nigerian crypto firms struggled to survive, foreign exchanges pioneered peer-to-peer (P2P) trading, allowing users to bypass traditional banks. Recognizing its potential, local startups quickly adopted and refined the P2P model.
Platforms such as Roqqu and Quidax launched their P2P features in 2021, while Busha introduced Busha Connect, a system where verified merchants acted as middlemen to facilitate transactions. This helped reduce fraud risks compared to unregulated P2P markets.
Other companies, like Luno, took alternative approaches. Instead of relying on P2P, Luno introduced a voucher payment system, enabling users to buy crypto using third-party services. However, cashing out remained a challenge.
Despite these innovations, liquidity issues persisted. Without access to bank accounts, startups struggled to process transactions. To stay afloat, many turned to offshore banking solutions such as Circle and Nexo, allowing them to manage liquidity through stablecoins. Others pursued foreign licenses, such as the Polish Virtual Asset Service Provider (VASP) license, to gain credibility with international banking partners.
While many Nigerian crypto firms were struggling, Yellow Card, a US-based crypto startup, adopted a different approach. Instead of relying solely on the Nigerian market, it expanded into 20 African countries, including Botswana, where it obtained its first crypto license in 2022. “The ban threw everybody off-balance. Exchanges that operated [only] in Nigeria couldn’t survive,” said Lasbery Oludinmu, VP of Operations at Yellow Card.
By diversifying its presence across multiple regions, Yellow Card minimized its exposure to Nigeria’s regulatory risks, positioning itself as one of the few crypto companies to thrive despite the ban.
In December 2023, Nigeria lifted the crypto ban, signaling a shift in its regulatory stance. By August 2024, the Securities and Exchange Commission (SEC) issued provisional licenses to local platforms such as Quidax and Busha. However, banks remain hesitant to engage with crypto businesses due to the lack of clear guidelines from the CBN.
The exit of Binance from Nigeria’s P2P market has created an opportunity for local startups to reclaim market share. However, the key to success lies in compliance and innovation. “Crypto companies cannot overlook compliance again. At BoundlessPay, we’ve made it a priority to know every single user [over 15,000 of them] and monitor their activities on our platform at all times,” said Franklin Peters.
As Nigerian regulators seek to establish a structured framework, startups that can balance compliance with innovation will be best positioned to thrive in the evolving crypto landscape.
