Nigeria’s rising inflation has caused an uptick in cryptocurrency adoption in the country, according to a new study on the regulation of the global blockchain and cryptocurrency market.

The COVID pandemic sparked a spur in the growth of the crypto market across Africa, The “Global Blockchain and Cryptocurrency Market 2023” report found in tracking the regulatory landscape across Nigeria and several other markets covered by the study.

Despite the crypto winter, authors of the study say, the U.S. remains the front runner in implementing tighter regulations around cryptocurrency.

Tracking global blockchain and cryptocurrency market trends

“The pandemic led to a spur in the growth of the crypto market in Africa,” The Global Blockchain and Cryptocurrency Market 2023 authors say, “mainly because of the lockdown, growing inflation in Nigeria and Kenya, and lack of financial inclusion.” 

They say that, “in February 2022, a higher share of non-crypto owners in the region indicated to be interested in buying cryptocurrency in the coming years. In addition to this, countries such as Kenya, South-Africa, and Mauritius, among others, are taking policy measures to incorporate crypto currencies in the conventional banking system.” 

Meanwhile, the adoption of cryptocurrency worldwide is increasing significantly, and the U.S. is no exception to this trend. Although nearly three-quarters of the adults surveyed across the U.S. have never traded, invested, or used cryptocurrency as of July 2022, the number of adults owning and using crypto is forecasted to double as of 2023, as revealed by the report.

Furthermore, it is also estimated that the payments made via cryptocurrencies will reach a value in the billions of Euros as of 2022, witnessing a high double-digit growth compared to 2021. Not only the consumers but also the policy makers in the U.S. are taking steps to incorporate virtual assets such as crypto in the traditional finance and banking system.

With such a fast-growing crypto market, regulations relating to cryptocurrencies are also somewhat in place. For instance, recently the country saw the implementation of the Responsible Financial Innovation Act, which defines detailed rules and regulations for the cryptocurrency market, according to the report.

Furthermore, the Crypto Regulation Bill is also another tight policy regulation that is already present in the U.S. economy. Despite the growth in the crypto activity, the fall of the crypto market in 2022 sent negative waves globally, thereby reducing cryptocurrency and blockchain related funding and investment activity.

The crypto ecosystem faced a slowdown in terms of funding and investment also within the North American region as of H1 2022 after it witnessed huge investments in 2021. Cryptocurrency witnessed negative asset price movement, with investors withdrawing their investments and refraining to invest in crypto.

Bitcoin was among the most affected cryptocurrency, mainly due to the collapse of FTX, the largest cryptocurrency exchanges and the decision of a major US cryptocurrency lending company to stop withdrawals.

Countries in Middle East and Africa are catching up to their developed counterparts globally in terms of adoption and ownership of cryptocurrency

Within the Middle East, UAE and Bahrain are the front runners in terms of embracing cryptocurrency as an alternate payment method. “The higher adoption of cryptocurrency in the UAE, friendly regulations, and trust of a certain percentage of the population in digital currencies worked in favour of the country in becoming the growing crypto hub, as mentioned in the report. UAE is also opening up more to allow international crypto exchanges to operate in the country. Abu Dhabi is licensed to be the home to the biggest crypto exchange in the U.S.”

The decentralised finance ecosystem is also growing rapidly within the region, with the majority of the transactions in Lebanon being made via DeFi.

“However, this share was quite low in Iraq. Another country showing continuous progress in the adoption of cryptocurrency is Bahrain, which also happens to be a large Fintech hub and sees a presence of several prestigious crypto exchanges. Moreover, it was the first country to impose a proper regulation relating to cryptocurrency in 2019,” the report says.