Nigerian Cryptocurrency under the Hammer

Immediate crack-down to expose any entity dealing in cryptocurrency
  • Central Bank of Nigeria ordering an immediate closure of any accounts dealing in cryptocurrency or facilitating payments for crypto currency exchanges
  • Conflicting reviews regarding crypto treatment
  • Experts in this field have expressed their reservations on complete prohibition

The apex bank of Nigeria has issued a circular highlighting the risks. They cautioned the deposit money banks (DMB’s), Non-bank Financial institutions (NBFI’s), other Financial institutions (OFI’s), and members of the general public. All such entities have been strictly directed to expose any individual or entity running such accounts. If they fail to adhere to such directives, it would attract strict sanctions.

Experts Highlighting Concerns over Outright Bans

Multiple experts in this field have expressed their reservations on complete prohibition. They believe that appropriate regulations should be in place including a rule that will stipulate the number of people participating in such trades. Regulations will ensure that investors are protected through capital requirements.

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Presently, cryptocurrency is considered as a store of value, a medium of exchange and trade providing the same characteristics as money. This aspect in the current scenario should be carefully examined. and controls should be implemented instead of prohibiting the same. 

Additional regulations that can be implemented are stipulated capital requirements or minimum threshold which will discourage individuals who don’t have good intentions. It’s a safe method of filtering out any possibility of dishonest tactics.

Is this a Contradiction by the Government?

The current decision led to pointing out the recommendations of Nigerian Communications Commission (NCC) in 2020, which had the focus on regulations of digital money. This decision contradicts the previous efforts made by the government and may also be detrimental to the overall economy of the nation.

The CBN (Central Bank of Nigeria) should have handled the situation with a little more caution. The public should have been told about the possession of confidential information and the drawbacks of digital means of exchange.

The CBN has not specified their motivation and have only talked about the Financial System Stability which was performed a few years ago, warning that cryptocurrencies are injurious and can be used for financing of fraud and terrorist activities. This aspect in itself does not sound convincing as there are various other modes of currencies outside the banking industry which can fuel activities capable of financing drugs and other illicit activities.

It is evident that criminals have improvised their knowledge and attacks to include vulnerable platforms. The risks associated with the use of virtual currency and exchanges need to be completely pinned down. The almost invisible and decentralised nature of virtual currencies does create a potential for distracting the regular movement of crypto prices and siphon them to unchartered territories.

However, it is this balance of the benefits and drawbacks which should be carefully considered by the government before arriving at any final decision.

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Andrew Smith
Andrew is a blockchain developer from his education and developed his interest in the cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer.

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