When CBN issued a warning to financial institutions to stop trading or facilitating payments to cryptocurrency exchanges, Nigeria’s crypto community was shocked.
Many young Nigerians involved in cryptocurrency transactions are dissatisfied because they are fully aware of the Apex Bank’s impact on Africa’s rapidly developing financial ecosystem.
Since the announcement was made to the public, the Central Bank of Nigeria’s decision has disturbed the fintech industry and political leaders, as Bitcoin and CBN became one of the hottest trends on social media after the announcement.
Business magnate and former Senator Benedict Murray-Bruce spoke on Twitter, asking why such a decision was made quickly.
Some crypto experts also believe that the CBN method is very detrimental to the evolving industry.
Chimezie Chuta, the founder/coordinator of the Nigerian Blockchain User Group, expressed disappointment that the CBN policy may have an impact on Africa’s largest economy.
Chuta said: “Thousands of young Nigerians are currently earning a decent living to put themselves through school via crypto trading. Many are sustaining their families and loved ones via crypto trading. What about the thousands of new businesses and jobs created by crypto innovation? What about the revenue that is flowing into the country as a result of the huge volume of trades being carried out on major exchanges?
Buchi Okoro, CEO and co-founder of Quidax, Nigeria’s largest cryptocurrency exchange, once said. CBN’s letter was like getting a spanking from your parents for good behaviour. But out of respect you take it in stride and keep working harder.”
The latest CBN policy has attracted more and more Nigerian users, including millennials and small business owners, who are using this digital asset to make payments and resist legal inflation.
Rume Ophi, a partner and brand strategist at Vorem, Nigeria, talked about the policy’s impact on a large number of Nigerians, especially those who are not familiar with cryptocurrencies. He says;
“Newbies are going to be scared of losing their funds because they feel bitcoin and other cryptos can be destroyed by the government, which is not possible. Those that have invested in exchange platforms will feel terrible with such hostile directive, thereby preventing them from serving their customers.”
Former Nigerian Vice President Atiku Abubakar paid more attention to this matter. His advice on Twitter is that when Nigeria’s youth unemployment rate is high, financial industry players should not abandon Africa’s largest economy.
“We Need to Open Up Our Economy, Not Close It. “The number one challenge facing Nigeria is youth unemployment. In fact, it is not a challenge, it is an emergency. It affects our economy and is exacerbating insecurity in the nation.”
Adebayo Juwon, head of leading cryptocurrency exchange FTX Africa, confirmed this trend.
“The stiffness of the Nigerian government on crypto adoption has impacts on the growing industry of digital payment, but this is good for innovation. Decentralization of finance has endless possibilities; therefore, it is only rational for the government to get involved when they can. Innovation can’t be stopped; it can only be delayed.
“It is important to clarify that CBN didn’t ban crypto in Nigeria; they simply asked Nigerian financial institutions not to process crypto payments pending regulation.”
It is important to note that the CBN notice does not criminalize cryptocurrency. The highest authority to protect Argentina’s financial system is legal power. However, some crypto experts believe that it does not belong to the financial ecosystem. This will put Nigeria at a significant disadvantage. In the field of financial technology.
CBN Banned Cryptocurrencies Based on FBI Recommendation
According to some media reports from Nairametrics, CBN was earlier warned by the United States’ Federal Bureau of Investigation (FBI), on the activities of criminals using crypto assets to bring into the country hundreds of millions of US Dollars illegally obtained from emerged markets.
However, data retrieved from Chainalysis shows that the percentage of illegal crypto activity related to fraud is not as high in Africa as it is in other parts of the world. From July 2019 to June 2020, illegal cryptocurrency transactions accounted for only 2% of the roughly $16 billion in transactions in the region. Fraud accounts for 55% of these low-level illegal transactions.
To prove the rationality of its instructions, CBN issued a statement insisting that these cryptocurrencies are issued by unregulated and unlicensed companies, which has legality issues. It has also been alleged that cryptocurrency was used to fund several illegal activities, including terrorism and money laundering.
Elelu-Bashir Mohammed, the Nigerian community manager at Crypto.com, gave valuable suggestions about the Nigerian cryptocurrency community’s expectations for Apex Bank in Nigeria when he received a phone chat from Nairametrics.
“I believe it’s time for the Nigerian government to start looking at ways Nigeria can benefit from the robust tech blockchain is offering such as voting mechanisms, IOT, supply chain, etc. The CBN should also invite the necessary stakeholders in the crypto and blockchain space and create a regulatory framework for financial institutions willing to extend their services to crypto-related businesses,” Mohammed said.
Juwon shared his thoughts: Why should Nigerian monetary stakeholders not view cryptocurrency as a threat to the current financial system, but instead accept the ever-changing financial instruments in emerging markets?
“The tech/crypto community in several countries receives tremendous support from their government. Blockchain Council reported that Australia, China, Dubai among other developed nations is making precise moves towards the adoption of blockchain and accepting crypto payment. According to Forbes, payments giant PayPal will allow its 346 million users to buy and spend bitcoin and a handful of other major cryptocurrencies,” Juwon said.
Rotimi Ogunwede, head of marketing at the fast-growing crypto payments company Patricia, explained that regulatory reasons require Nigerians to use viable options for processing their crypto transactions.
“The new CBN policy will only encourage P2P trades which are even more unregulated unlike what Patricia has where we have KYC done on all users to ascertain their identity before any trade or exchange happens. We even go as far as linking users’ accounts to their individual BVN, to ensure transparency,” said Ogunwede.
Financial experts also concluded that this move by financial regulators will distort the African cryptocurrency market dynamics. Nigeria’s tendency to be a major player in the cryptocurrency space and to be home to many leading cryptocurrency service providers. These providers offer employment and synergies in Nigerian Fintech.
However, CBN’s recent guidelines on cryptocurrency transactions have forced the Nigerian cryptocurrency community and financial regulators to seek a unified approach. This approach will provide more education to regulators and the general public, thereby helping Nigeria’s economic benefit.