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- Crypto financial institutions are facing hefty premium on prices of the leading crypto token
- The CBN imposed ban on virtual currency have destroyed hyperbitcoinzation of small traders in the nation
- A Nigerian lawmaker claims that BTC is a threat to the national fiat currency
Crypto financial institutions are observed being under heavy pressure in countries like India and Nigeria. Earlier this month, the Central Bank of Nigeria (CBN) published a warning imposing an outright ban on Nigerian banks servicing crypto firms. All banks and financial institutions were ordered to close crypto firm’s accounts. However, it’s been roughly a couple of weeks since the ban was imposed, and it is observed that the price of Bitcoin in the country has skyrocketed.
Nigerian crypto financial institutions facing the impacts of the ban
Following Google trends data, it is observed that Nigerian public interest in Bitcoin has continued to outstrip other nations globally. Moreover, the ban on servicing crypto financial institutions has significantly affected the price of the flagship cryptocurrency, which has been spinning out of control. Where the average spot market of Bitcoin is near $51k, premiums in Nigeria translating the price near $71k. On the other hand, South Africa has a 3.24% premium on the token, and other firms like Argentina, Peru, and Vietnam have premium rates in the range of 1% to 3%. Indeed, comparing the 36% premium in Nigeria with the aforementioned nations clarifies that the hefty percentage is way higher.
It is also observed that the immediate impact of the cryptocurrency ban has stamped out the hyperbitcoinization of retail trading culture in Nigeria. Whereas in August last year, it is observed that Nigeria remained the best performing nation on its platform. Likewise, Bitcoin was also soaring in terms of search interest, bringing the country at the top, as the term was being searched the most in the nation.
Moreover, citing the outright ban as the reason, Nigeria’s Securities and Exchange Commission (SEC) holds on to its plans of regulating digital currencies in the nation for crypto financial institutions.
Cryptos posing threat to the national fiat currency
According to Sani Musa, a lawmaker of Nigeria, Bitcoin is a significant threat to the national fiat currency. However, several other senators questioned Musa’s statement, arguing in favor of cracking down on evil actors instead of preventing residents from making significant profits. Indeed, such senators also believed that the users could be benefited from opportunities in the crypto industry.
