Following the outcry over the latest policy of the Central Bank of Nigeria targeting cryptocurrencies, the institution has reinforced its stance with another statement. In the latest five-page document, the CBN insists that this policy is designed to protect the country’s financial system from the “risks” associated with cryptocurrencies.
Still, the central bank claims the directive “did not impose any new restrictions on cryptocurrencies”, it just vomited what was said four years ago. In January 2017, the CBN published a circular alleging that the use of cryptocurrencies violated the “key mandate of the CBN as the issuer of legal tender in the country”. Even so, the use of cryptocurrencies has increased since then and now Nigeria is one of the leading cryptocurrency markets in the world.
Despite the obvious acceptance of cryptocurrencies, the CBN statement seems to ignore this evidence. Instead, the statement relies on unsubstantiated claims to justify the CBN’s decision to exclude crypto players from the banking system. For example, the CBN claims that China has “completely banned and all exchanges are also closed”. In another case, the CBN is trying to discredit cryptocurrencies by invoking the infamous remarks made by billionaire investor Warren Buffett about Bitcoin.
Using these and other debunked allegations, the press release concludes that the CBN “currently has no comfort in cryptocurrencies”. As a result, the central bank says it will “continue to do everything within its regulatory powers to educate Nigerians to refrain from using them.”
Meanwhile, as anger over the directive against banks mounts, the CBN statement explaining this decision doesn’t seem to calm the nerves. Some crypto gamblers have suggested that they may have to leave their country of birth and look elsewhere for opportunities. However, for some crypto players like Adedayo Adebajo, that CBN decision was inevitable. Adebajo, executive director of Jelurida Africa, a consulting firm, points to the recent protests by Endsars as a factor that has contributed to this changed approach by the central bank.
Towards the end of 2020, when the CBN ordered the freezing of bank accounts associated with leaders of the Endsars protest movement, organizers began asking for donations in bitcoin instead. As a result, donations continued to pour in to help the Endsars bankroll, and this has since inspired other activists, as Adebajo explains:
Recently it was again (cryptocurrencies were used) to raise funds for Sunday Ighoho, an activist who acts in the interests of the people. My question is, will the CBN restore support for cryptocurrencies if the fundraising is done in support of the seated government? Situations like this provide further reasons why decentralization such as blockchain technology is urgently needed in Africa.
Meanwhile, the CBN decision has also been condemned by crypto influencers outside Nigeria. For example, after reports were circulated about this policy, Andreas Antonopoulos tweeted a prominent Bitcoin educator: “Disappointing politics from Nigeria.”
The rise of P2P trading
Still, some players in the Nigerian crypto industry firmly believe that this policy will ultimately encourage peer-to-peer trading. For example, in response to Antonopoulos’ tweet, Chris Ani, a teacher and startup consultant, insists that the CBN policy “did not ban cryptocurrencies”. Instead, this guideline only applies to “crypto trading with banks and crypto exchanges”.
Meanwhile, Coinstelegram Media and Fund co-founder Alexander Belov told news.Bitcoin.com that this CBN policy has more to do with the state of this country’s economy. The Nigerian economy, which has been badly hit by the global pandemic, is facing a persistent currency shortage.
In turn, foreign exchange shortages are forcing many to switch to cryptocurrencies, which can be bought on local exchanges. Therefore, by banning banks from housing cryptocurrency companies, the CBN is trying to force Nigerians back to the traditional banking channels it controls. The directive could also be an attempt to mask the real challenges facing this economy, as Belov explains:
It (the guideline) only shows the willingness of countries with weak economies to respond harshly to the growth in crypto adoption among the population in order to protect their economies and banking system.
What do you think the end result of this policy will be? You can share your views in the comments section below.
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