The Central Bank of Nigeria (CBN) has said its decision to ban cryptocurrency was necessary to prevent crime and reduce risks
Several Nigerians condemned the move, saying the ban had a political undertone beyond the above-mentioned arguments.
The Senate of Nigeria has summoned the CBN Governor to declare the decision to ban cryptocurrency.
In a move that sparked outrage on social media earlier this month, the CBN issued a reminder to regulated financial institutions in the country that a 2017 regulation prohibits them from trading in cryptocurrencies or from facilitating payments for cryptocurrency exchanges.
Following the outrage that greeted the incident, the CBN issued a press release explaining the reason for the recall. According to the statement of acting director of corporate communications Osita Nwanisobi, the ban on cryptocurrency is necessary because it is used to commit crimes. It specifically mentioned terrorism and money laundering as crimes committed with cryptocurrency. It also referred to the Silk Road, the dark web site where cryptocurrency was used to buy drugs and other illegal goods.
CBN’s reasoning for banning cryptocurrency
The CBN also claims in its statement that the ban is necessary because of the risks associated with the speculative market, and says Nigerians need to be protected.
However, several young Nigerians believe that this ban is the result of the End SARS protests. The protests were part of a massive campaign in November 2020 against police brutality in the country. The protest began as a hashtag on social media, but quickly developed into personal protests that closed several cities for days.
As part of the steps to stop the protests, the CBN ordered banks to freeze the accounts of individuals connected with the protest. This was probably done with the belief that the protests would stop if funding was reduced.
But this move could not work because donations were sent in bitcoin to fund the necessary logistics of the protests. The movement also received the support of Twitter founder Jack Dorsey. Many believe that recalling the CBN ban on facilitating cryptocurrencies is additional retaliation from the government.
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Nigeria is the second largest bitcoin market after the United States in volume traded via the Paxful exchange. It is therefore not surprising that the news about the ban reminder was poorly received on social media. Several people highlighted the admonition as further proof of the government’s anti – youth agenda in power.
Following recently released regulatory proposals for investments in cryptocurrency by the Securities and Exchange Commission (SEC) in Nigeria, others also pointed to the discrepancy in decision-making between financial regulators. This indicates the absence of cooperation between government institutions regulating the financial sector in Nigeria. The SEC has suspended its regulatory plans following the CBN ban recall.
Currency exchange operated in Nigeria has also stopped accepting or facilitating transactions with the Naira. Many of these platforms have informed their users on social media about the decision.
The CEO of the largest crypto-currency exchange platform in the world, Binance, Use Twitter to instruct users to withdraw their naira on the exchange or to convert to cryptocurrency.
This is what happens when one tries to ban crypto.
If you have $ NGN on Binance you can: 1. withdraw NGN soon, or 2. convert to #crypto and hold it
It is likely that the Nigerian banks will stop working with scholarships. P2P trading is likely to flourish as a result. https://t.co/GhA6M2GMOg
Local economist Nonso Obikili spoke about Binance withdrawal from baira transactions noticed the importance of Binance in the cryptocurrency industry in Nigeria. According to him, the daily volume of naira crypto transactions on Binance exceeds that of the Nigerian stock exchange.
He said that although the trading volume on the Nigerian stock exchange on 5 February 2021 was 5.6 billion naira, the trading of BTC / NGN on Binance alone was 13.4 billion naira. Since Binance is just one exchange out of many, the total transactions are likely to be much higher.
How important is crypto in Nigeria? According to binance, the value of BTC / NGN transactions was worth N13.4 billion. In this context, trading on the Nigerian stock exchange today was N5.6 billion. And binance is just an exchange.
The crypto enthusiasts also tweeted about the Binance statement and said Nigerians need not panic. According to the Nigerian blockchain engineer Tosin Olugbemiga, all a user has to do is not sit down on the platform. It is also necessary for the user to exchange any naira balance for USDT.
Do not deposit naira on Binance again
Swap your naira immediately for USDT if you have naira balance
Do not sell your crypto assets in a panic.
It is a global trading system that can NOT be affected by the CBN policy of Nigeria.
Many Nigerians also question the logic behind the CBN reminder, saying that there is no rational argument for it and that, given its consequences, it could run counter to the promises of the current government to take 100 million Nigerians out of poverty.
A social media commentator, Japhet Omojuwa, tweeted that the CBN can not claim that crypto traders in Nigeria are anonymous. This is due to the processes associated with owning a bank account in Nigeria, from a bank verification number to the KYC regulations to ensure that banks know their customers.
You cannot trade crypto via a Nigerian bank without your BVN. Followed by a standard KYC protocol. There is no secrecy here. There are limits to transfers and other checks. It has nothing to do with anything other than the typical government that stands against the people! https://t.co/QqQWV7unpF
Others cite other social issues currently plaguing the country, such as attacks by herders. As a Twitter user Ebovi Wali pointed out, there is irony in a government that has been debating public grazing regulations for many years, but to ban cryptocurrency quickly.
Nigeria may ban crypto-commerce overnight, but has been discussing the ban on open grazing for almost a decade ??
In addition, according to Adewale Yusuf, CEO of TalentQL, government policies restricting foreign investors to cryptocurrencies may discourage foreign investors.
I just spoke to a foreign investor who has invested in Gokada and a crypto startup in Nigeria. He’s really worried.
Other investors also noted that the new policy does not address the reason for the adoption of cryptocurrency by Nigerians and the monetary problems. So, policies like these can push investors and even technological beginners to go to other African countries.
Former Nigerian Vice President Atiku Abubakr also condemned the ban. From his point of view, it would possibly reduce the inflow of capital to Nigeria.
Lawmakers summon CBN governor
In light of the uproar surrounding the ban, the Senate’s upper chamber requested that CBN Governor Godwin Emefiele appear before him and explain the decision. The Securities and Exchange Commission was also summoned.
The Senate decided after considering a motion raised by Senators Istifanus Dung Gyang and Adetokumbo Mukhail Abiru. The senators raised the motion to discuss the issue, declaring that cryptocurrency seems like an opportunity as well as a threat.
It was co-sponsored by Senator Mukhail Adetokumbo Abiru, who provided arguments in support of and against cryptocurrency transactions in the country. He pointed out the different risks involved and the threats it poses.
However, he also outlined the various benefits of cryptocurrency and its gradual acceptance by institutional investors. According to him, the CBN ban will not stop the economic benefits of cryptocurrency transactions. It is therefore necessary to have a holistic view of the matter.
The motion was finally adopted after Senator Hassan Hadejia for the amendment of the Senate committees on ICT and cybercrime, capital markets, banking, insurance and other financial institutions decided to analyze the issue.
This is a guest post by Oluwapelumi Adejumo. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
