In Nigeria, digital currencies are more than a novelty. Over 25 million Nigerians are turning to crypto, with stablecoins, in particular, leading a shift in how people send, store, and spend money. From peer-to-peer remittances to cross-border business payments, stablecoins like USDT are becoming staples of everyday transactions.
Yet, despite this adoption, venture capital (VC) funding is drying up. According to a report by Hashed Emergent, an India-based Web3 VC firm, surveying the Nigerian Web3 landscape, startups in the sector—ventures founded, owned, and operated by local founders—raised just $20 million in 2024, down slightly from $22 million in the previous year.
Across other sectors, there was a funding decline; African startups raised $2.2 billion in 2024, declining by 25% from 2023. Still, the decline seen for Nigerian Web3 startups regressed to a level not seen since 2021.
The dip comes even as activity in the market grows, highlighting a disconnect between local demand and global investor confidence.
Infrastructure takes the lead
Not all parts of the Web3 space are cooling off. Blockchain infrastructure projects are still attracting investor interest, claiming more than half of 2024’s total funding. In 2024, Zone, a blockchain-based payment processor, closed an $8.5 million round, making it the standout deal of the year.
Similarly, Hyperbridge, a cross-chain interoperability project, gained traction in 2025 after raising $5.3 million in seed funding.
On the other hand, Web3 finance startups—once the darlings of African crypto—are no longer enjoying the same level of backing. Web3 finance platforms, such as crypto exchanges, decentralised finance (DeFi) applications, and real-world asset (RWA) platforms saw muted activity in 2024, down significantly from their 2021 and 2022 highs.
Investors are cautious
The retreat from financial apps suggests a shift in investor priorities. Crypto Valley VC (CV VC), one of the active VCs in Africa, has increasingly provided funding to early-stage Web3 startups through ecosystem-led grants. These are small-scale investments that help startups contribute to and grow within larger blockchain communities.
In the last two years, CV VC funded Nigerian Web startups Ivorypay and Jamit with $135,000 through its CV Labs accelerator. In 2024, Jamit, a decentralised podcasting startup, was also part of CV Labs’ Lisk blockchain incubation hub, which gives established Web2 startups and early-stage Web3 startups a chance to get up to $120,000 in funding. CV VC’s last-funded startup in Nigeria was HouseAfrica. In 2023, it backed the RWA startup with $400,000.
With the ecosystem grants, investors like CV VC can provide a more direct, hands-on approach to help startups grow and scale their operations through mentorships and opening them up to market access.
While this suggests a change in strategy, CV VC insists it is not shifting its focus in Africa.
“There has been no change in strategy,” Jarryd Kennedy, CV VC’s head of investments in Africa, told . “We are very excited by the quality and the level of activity that we see in the blockchain and Web3 ecosystem in Africa. Our pipeline is full of incredibly compelling investment opportunities across the continent.”
Yet, providing ecosystem-backed funding, through accelerator programmes and direct support, is likely a way to manage risk.
Adaverse, another blockchain-focused VC firm which has previously backed 16 Nigerian startups—including Afriex, BitSport, and Bitmama—kept a low profile in 2024, funding only UmrahCash, a Web3 startup based in Kano, Nigeria.
“We remain cautious yet open to investments across African markets,” Hailey Yang, venture lead at Adaverse, told . “Some regulatory developments are promising, and we are optimistic about the potential for clearer regulations that could foster innovation.”
Regulation remains a roadblock
The caution isn’t just economic—it’s regulatory. Nigeria’s Web3 ecosystem is only working its way through an unclear, fragmented regulatory framework, where oversight is shared across multiple agencies.
The Central Bank of Nigeria’s (CBN) crypto restriction in 2021 and the recent clampdowns on crypto exchanges have muddied the waters.
While the Nigerian Securities and Exchange Commission’s (SEC) Accelerated Regulatory Incubation Programme (ARIP) promises to ease entry for Virtual Asset Service Providers (VASPs) in the country, regulatory inconsistencies and delays still persist.
This uncertainty often pushes startups to set up offshore operations, which can limit their local impact and complicate access to regional funding. The perception that Web3 startups succeed abroad could also be putting undue pressure on founders, hastening expansion plans across Africa. Yet, setting aside the costs for a Nigerian Web3 startup to enter South Africa, for example, the operational challenges are significant—particularly due to stricter regulatory compliance.
South Africa, compared to Nigeria, has more clearly defined rules around crypto and a structured tax framework for virtual assets. In contrast, Nigeria’s lack of regulatory clarity leaves startups operating in limbo, unsure whether they are in breach of any rules—or if there are rules at all.
Expansion into other African markets only makes strategic sense when targeting the big four: Nigeria, Ethiopia, South Africa, and Kenya, where crypto adoption is most developed. A case in point is Kenyan crypto startup Kotani Pay, which acquired a South African crypto licence due to Kenya’s unclear regulation on digital assets.
Stablecoins: a bright spot for Web3 finance
Despite the VC freeze, stablecoins are seeing broader adoption. Globally, stablecoin transactions are increasing, reaching $625 billion in February 2025 alone.
Locally, too, the interest remains the same—even among traditional financial institutions. According to the Hashed Emergent report, the USDT/NGN has become the most-traded pair in Nigeria, eclipsing Bitcoin, and signalling local interest in stablecoins.
On 22 April, Circle launched the Circle Payments Network, enlisting partners like Flutterwave and Onafriq. The network enables faster, cheaper, and more transparent settlements via the USDC stablecoin.
On April 28, Mastercard, the payments giant, announced it partnered with global crypto exchange OKX, card payments company Nuvei, and blockchain-based financial payments giant Circle, to launch cards and payment capabilities for merchants to accept stablecoin payments, bringing digital currencies closer to mainstream utility.
This was not Mastercard’s first foray into Web3, following its recent August 2024 partnership with Consensys-owned MetaMask and Baanx, which allowed MetaMask users to spend their cryptocurrency on everyday purchases in fiat currency.
Given its traction, the broader trend shows that traditional payment companies are warming up to stablecoins. As it gains more momentum—and possibly finds its way to wide usage in cross-border transactions—Web3 startups offering stablecoin transaction rails and products could be well-positioned to attract interest from investors and external funding.
What comes next?
With funding drying up, founders are turning to crowd sales and grant programmes to keep projects alive. Ecosystem-led initiatives are playing an outsized role, acting not just as funders but as collaborators in growth.
Developer communities like Web3bridge and SuperteamNG are thriving, supported by L1 and L2 blockchains hungry for local talent.
Still, real progress will require clarity from regulators. The SEC now holds official jurisdiction over digital assets and has pledged to issue detailed guidelines.
Nigeria’s Web3 sector is not short on talent, users, or ambition. What it lacks is the capital—and certainty—to turn that potential into scale. Until the money and the policy catch up to the movement on the ground, the country’s most promising blockchain builders may remain underfunded at home.
