Why $59 billion in cryptocurrency transactions cannot be ignored by banks —Experts

THE rapid rise of cryptocurrency transactions—now reaching an astounding $59 billion—can no longer be dismissed by traditional banks, according to financial experts. As digital assets gain mainstream traction, banks are facing mounting pressure to adapt or risk losing relevance in an evolving financial landscape.

Oluwaseun Odeku, Partner and Lead, Regulatory Compliance at KPMG Financial Services, emphasised the significance of this transaction volume, stating that banks must consider how to leverage the growing crypto market.

According to him, “whether we choose to adopt this blockchain technology within a banking ecosystem or not, I think these transactions will continue to go on. We think it’s in the best interest of the entire system to look at opportunities that we can use to collaborate and use blockchain technology as well as trade crypto, so that we can create a lot more transparency in financial transactions.”

He further highlighted the opacity of the current system, where the beneficiaries of these $59 billion transactions remain unclear. Integrating these transactions into the banking system, he argued, would improve transparency and allow better tracking of cash flow.

“It will also bring in all those involved in it into the financial services system. And then you can get more data. You can request for more KYC, and then also just root out the bad actors participating in this,” he added.

Speaking on a Channels Television programme monitored in Lagos, Odeku pointed out that blockchain technology is inherently secure and immutable.

“In this space, I think the blockchain technology in itself is immutable. You cannot change the data in the public ledger. That kind of technology is very beneficial, especially when you’re trying to fight financial crime. You can basically trace and track transactions as they flow.

“You can isolate transactions that have been linked to bad actors or that have been linked to fraud. And that helps the financial system better. In the sense that you have a secure financial system, it doesn’t come without this risk. But I think proper risk management, like has been done in other jurisdictions, can help manage those risks of crypto and blockchain technology.”

Cryptocurrency transactions are projected to grow further, and banks that fail to innovate risk losing market share to more agile competitors.

In Nigeria, where a weakening currency and high inflation have driven crypto adoption, transactions reached approximately $59 billion between July 2023 and June 2024—a 4.06 percent increase from the $56.7 billion recorded the previous year, according to blockchain research firm, Chainalysis.

Arushi Guel, Head of Policy for the Middle East and Africa at Chainalysis, underscored the crucial role of banking in the crypto ecosystem.

She explained that while crypto exchanges and service providers handle basic financial activities such as salary payments and rent, they still require banking services to settle transactions when moving funds in and out of the crypto ecosystem.

Traditionally, banks have distanced themselves from crypto due to regulatory uncertainty and a lack of understanding of associated risks. However, Guel noted a positive shift in global policy, where banks, regulators, and financial authorities are recognizing that “we cannot just ban crypto exchanges or crypto from our jurisdiction.”

Her words: “We need sufficient oversight over these players to be able to manage that risk. So really, we’re moving from de-risking to risk management and mitigation in terms of how banks are doing it. It’s really through the use of blockchain analytics.

“What blockchain provides is a level of attainability and traceability that is simply not possible in traditional finance, because in a blockchain, you’re not just looking at your direct counterparty, but you can look at the parties a number of times down the line. You know where the transaction originated.”

She stressed that blockchain enables near real-time monitoring of transactions, giving banks an opportunity to manage risks effectively rather than avoiding the sector altogether.

“And also there’s a bit of a nuance there—to understand the exposure, but also understand what part of that exposure is risky and what part of that exposure is not risky, because that will really help define the rules of the game for the industry and eventually help everyone thrive responsibly,” said Guel.

Despite the sector’s rapid expansion, crypto-related scams remain a major concern. In 2024 alone, global crypto scams generated $10 billion, with many linked to high-yield investment fraud and “pig-butchering” schemes. KPMG has urged financial institutions to remain vigilant, as these risks continue to shape regulatory decisions.

Recognizing the resilience of the crypto market, Nigerian regulators have adapted their approach. Initiatives such as the Central Bank of Nigeria’s (CBN) Virtual Asset Service Providers (VASPs) guidelines and the Securities and Exchange Commission’s (SEC) Accelerated Regulatory Incubation Program (ARIP) signal a shift towards clearer oversight and engagement with the industry.

As cryptocurrency adoption accelerates, experts warn that banks must rethink their strategies. Whether through direct participation, partnerships, or regulatory adaptation, the financial sector can no longer afford to ignore the $59 billion reality of the crypto economy.

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