On 5th Feb’21, the Central Bank of Nigeria released a notice to all the banks and financial agencies, which stated that trading, facilitating payment and converting cash to bitcoin and vice versa is strictly prohibited in Nigeria. The CBN has also notified and further advised the banks and all financial agencies to crosscheck such individuals or companies, who transact cryptocurrency or trade cryptocurrency, and they should terminate accounts of such individuals and companies.
Nigeria is known for being the world’s 2nd largest Bitcoin market, while the 1st largest Bitcoin market is still the United States. Still, Nigeria has banned the fastest growing cryptocurrency- bitcoin. The economy of the country might be endangered because this cryptocurrency has played a vital role in establishing the economy of this developing country.
The letter from CBN had a huge impact on the people of Nigeria. The backbone of their economy was shattered, and people were anxious to know about the future of cryptocurrency. They weren’t sure about the possible negative impact it will have on Nigeria’s developing cryptocurrency trade market.
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On 7th Feb’21, The CBN issued a notice of press release for the public eye. It stated the motives and reasons behind the ban of cryptocurrency trade and transactions by banks and financial agencies.
Why Did CBN Prohibit the Transactions of Cryptocurrency?
The CBN justified prohibiting the transactions of cryptocurrency by stating that it violates few laws of the country. The money flow in cryptocurrency is unmonitored and unauthorized by many individuals and companies, this arbitrates many existing laws in Nigeria and is also considered illegal.
The CBN has also marked the lack of accountability of KYC, made it more prone to illegal trade. Moreover, the currency can be used to fund terrorism and also be used for money laundering. One other reason for the ban of cryptocurrency is that its volatility has threatened the stability of the economy and financial conditions in other countries.
The Impact on Cryptocurrency Trade in Nigeria
Nigeria is the world’s 2nd largest Bitcoin (cryptocurrency) market while having trade over $500 million just in the last five years. The CBN’s initiative on the ban of cryptocurrency will have an incredible impact on the world’s 2nd largest bitcoin market because people will not be able to buy cryptocurrencies while using their own credit or debit cards. Meanwhile, the bank and financial agencies have been told to look out for the people and platforms like bitcoin equaliser review involved in cryptocurrencies and terminate their account so that their trade comes to a halt.
However, many individuals and cryptocurrency companies have found means to trade through connections and this provoked people to trade cryptocurrency from exchange agencies to people. On the contrary, the payment is still made through the banks and as per the CBN’s directive, the banks are allowed to investigate and terminate accounts of individuals and companies who are found to have an inflow or outflow with the cryptocurrencies. Yet, it is still unclear if the people would be able to get back their account and cash in the future.
Conclusion:
The action of CBN against cryptocurrency has received formidable attention from high-ranking government officials. On 11th Feb’21, the senate of Nigeria made his statement on the CBN’s operation, and they made it clear that they were not on board with the ban of cryptocurrencies transactions. The senate then asked for the Governor of CBN to come over and discuss the operation of the CBN.
The senate’s involvement might be due to the pressure from stakeholders and business men who have traded in cryptocurrencies. Many still condemn the stance of CBN on cryptocurrency in the country of Nigeria.
