Authorities in Nigeria and cryptocurrency exchange Binance Holdings Ltd. are in talks tto create a digital economic zone that will support blockchain technology adoption by businesses in the West African country.

Binance In Talks With Nigeria

According to a press release, Nigeria intends to use the Nigeria Export Processing Zones Authority (NEPZA) to establish the first economic free zone for bitcoin and other cryptocurrencies in West Africa.

NEPZA is in talks with Talent City, a company that specializes in creating special economic zones, as well as Binance, one of the top cryptocurrency exchanges.

Professor Adesoji Adesugba (NEPZA MD/CEO), Sameera Kimatrai (Binance Senior Legal Counsel), Luqman Edu (CEO Talent City), Sikiru Lawal (NEPZA Director). pic.twitter.com/73scHU4hYE

— NEPZA (@officialNEPZA) September 2, 2022

The proposed zone, according to NEPZA managing director Adesoji Adesugba, will be a first in West Africa and function similarly to Dubai’s virtual zones, which are intended to offer crypto firms laws, regulations, and tax incentives that are beneficial to the industry.

Adesoji Adesugba, NEPZA’s managing director said:

“Our goal is to engender a flourishing virtual free zones to take advantage of a near trillion dollar virtual economy in blockchains and digital economy,”

According to the statement by the NEPZA, the partnership intends to create a digital hub “similar to the Dubai virtual free zone.”

Nigeria, the most populous country in Africa, is focusing on digital technology as a way to diversify its economy away from crude oil and take advantage of a population that is becoming more connected and youthful. Startups in the fintech industry with valuations of $1 billion or more include Interswitch Ltd. and Flutterwave Inc.

A representative for Binance noted that the goal of the strategy was to promote long-term economic growth through digital innovation:

“As we continue to support blockchain adoption across the African continent, Binance is keen to collaborate with The Nigeria Export Processing Zones Authority to establish a virtual free zone with the aim of generating long-term economic growth through digital innovation.We look forward to sharing key details when plans have been finalized.”

Binance and the Dubai World Trade Center signed a Memorandum of Understanding in December of last year. By establishing a “new international virtual asset ecosystem,” the memorandum seeks to establish Dubai as a center for bitcoin and cryptocurrency-related goods and services.

Nigeria Hostility To Crypto Has Softened

The Central Bank of Nigeria issued a memo in February of last year prohibiting regulated institutions from “dealing” with bitcoin or other cryptocurrencies. Peer-to-peer (P2P) bitcoin transactions increased by 27% in Nigeria as a result of the ban.

In fact, just last year, P2P transactions in Africa as a whole surpassed all other countries in terms of volume. In the same period, Chainalysis published a global adoption index that ranked Nigeria among the top 10 nations in the world for bitcoin adoption.

BTC/USD falls below $20k. Source: TradingView

We may also look at current economic zones as Dubai and Nigeria work to create special economic zones that will help bitcoin and other cryptocurrencies. An example of a framework with a flexible economy is the free city of Próspera.

The government passed laws governing the trading of digital assets this year, and Nigeria Exchange Ltd. wants to launch a blockchain-enabled platform the next year to expand trading at the exchange.

Since the value of cryptocurrencies started to decrease in April, Nigerians have shown the most interest of any nation, according to a survey by price tracker CoinGecko.

Featured image from iStockPhoto, Chart from TradingView.com