Nigeria’s use of stablecoins dropped sharply by 38%, falling to $23.6 billion in the year ending July, according to blockchain intelligence firm Chainalysis. This is a significant reduction, considering Nigeria’s ailing economy and devalued naira. Despite widespread use of cryptocurrencies to protect wealth, Nigerians have reduced their reliance on stablecoins like Tether (USDT), primarily due to increased government scrutiny.

Government Crackdown on Crypto

The decline is largely attributed to Nigeria’s crackdown on foreign crypto exchanges such as Binance, OKX, and KuCoin. These platforms, especially their peer-to-peer services, were accused of foreign exchange racketeering, contributing to the naira’s depreciation. In March, Nigerian authorities charged Binance executive Tigran Gambaryan with money laundering, which has further dampened confidence in crypto platforms.

Impact on Nigerians

As economic conditions worsen, with inflation rising and the economy shrinking, Nigerians are finding it harder to access stablecoins. The government’s actions have pushed many traders to rely on informal platforms like Telegram groups. Binance’s exit has left a void in the market, though platforms like Noones, founded by former Paxful CEO Ray Youssef, are stepping in to offer trading services.

DeFi Adoption Surges

Despite the drop in stablecoin use, Nigeria remains a major player in Africa’s crypto market, accounting for 40% of the continent’s stablecoin transactions. Notably, the country has seen a surge in decentralised finance (DeFi) adoption, with $30 billion in value received by DeFi services. This makes Nigeria the global leader in DeFi adoption, driven by investors looking to maximise returns through crypto lending and other activities.