Bitfxt, a Nigerian cryptocurrency startup, has raised N5.45 billion from Payitup Clearinghouse Ltd. The amount, which was raised in a Series A funding round, is expected to help the company compete better with rivals like Quidat and Paychant.
The investment round has shown that the United Kingdom’s (UK) firm sees the Nigerian bitcoin market as revenue potential. Bitfxt intends to disburse the funds into infrastructure and the creation of more products for its customers and prospective ones.
While commenting on the future plans of Bitfxt, the Chief Executive Officer of the startup, Franklin Peters said, “Over the next couple of months, we will be working on infrastructural expansion and launching of some jaw-dropping products that will benefit Nigerians and Africans at large.”
The agreement also includes an extension of a $125 million Revolving Margin Facility for its traders to take maximum advantage of their position for higher gains. The company offers cryptocurrency solutions for users of Ethereum and Bitcoin.
Stumbling blocks in Bitfxt way: The bitcoin market in Nigeria is gradually growing but it is being challenged by financial and investment regulators, as well as lawmakers in Nigeria. There have been warnings by these institutions that cryptocurrency is not a legal tender in Nigeria.
In 2018, the Central Bank of Nigeria (CBN), Securities and Exchange Commission (SEC), as well as the Nigerian Stock Exchange (NSE) were all directed by the Senate to enlighten Nigerians on the risks involved in trading with Bitcoins but this report shows the enlightenment campaign has done little or nothing to dissuade Nigerians. Bitcoin is described as a volatile currency because it is operated mostly without regulations in place, thereby, creating loopholes for users to be defrauded.
The growth is also being hampered by trust issues among Nigerians who are used to the use of naira to trade. Aside from the low confidence, Nigerians have in the use of digital currency or cryptocurrency, Bitfxt has a rising competition to contend with as the bitcoin market continues to usher in new entrants. Already, the market is home to Quidat, Paychant, Bitmama, and Crypto Hub, amongst many others.
Despite the challenges, there’s a market in Nigeria for bitcoin operators, a new report from the Chartered Institute of Bankers of Nigeria shows. The use of Bitcoin is rising in Nigeria despite the warnings, as 41% of new users in bitcoins were reportedly from Nigeria, Ghana and South Africa.
The use of bitcoins has continued to grow worldwide irrespective of the dangers of insecurity of funds and scams. But not recognising Bitcoin as a currency for trade hasn’t stopped Nigerians, as customer behaviour gradually changes. The growth recorded among users in Nigeria is a pointer that the use of Bitcoin can’t be stopped, however, the CBN can curtail the activities of Bitcoin operators by regulating the cryptocurrency market.
Potential clash with CBN: Bitfxt, which has a payments and wallet solution called Boundlesspay, explained that the product allows people to save, borrow and trade in cryptocurrency, intends to offer a product that allows its users to receive payment in US dollars, an action the CBN frowns at and warns against in order to protect the naira.
In a recent report by Nairametrics, the CBN lamented the rates international money transfers are done in foreign currencies by Nigerians, saying it is detrimental to naira. The CBN said it has a spending policy that guides its currency because of the effect of spending foreign currency in Nigeria has on the value of the naira.