Why Nigeria is restricting crypto trading, digital money

9
425
crypto trading

Why Nigeria is restricting crypto trading, digital money

Nigeria’s central bank ordered deposit-taking banks and other financial institutions to immediately close accounts transacting in or operating cryptocurrency exchanges, saying such deals are “prohibited.”

Failure to comply with the directive will result in “severe regulatory sanctions,” according to a circular sent to financial institutions on Friday and published on the central bank’s website.

The country’s Securities and Exchange Commission said in September it would regulate trade in digital currencies to provide protection for investors and to ensure that transactions are transparent.

The tough stance by the central bank of Africa’s largest economy comes after protests in October against the excesses of the police’s Special Anti-Robbery Squad, known as SARS, which saw organizers accepting Bitcoins for funding after the government allegedly blocked local payment platforms for collecting donations.

“There’s a direct line that can be drawn from the EndSARS protests — which carried on partly with funding from cryptocurrency even though CBN restricted several accounts — to these latest regulations,” said Joachim MacEbong, a senior analyst at SBM Intelligence in Lagos. “This latest instruction will end up making the case for cryptocurrency adoption better than any other argument. One promises freedom, while the status quo only reinforces restrictions.”

But professionals in the crypto space do not believe the panic will last, or it will have any impact on crypto adoption.

Nigeria-based software and blockchain engineer Tosin Olugbenga told CoinDesk the CBN may have issued the directive because of the bitcoin price run of 2020 and growing interest in cryptocurrencies worldwide is causing Nigerians to convert their earnings to crypto.

“They’re moving money from naira to crypto. That is what the CBN sees and has taken issue with. It is not banning crypto trading. It’s just telling financial institutions not to allow their platforms to be used to buy or sell crypto on exchanges like binance,” Olugbenga said.

Olugbenga added that most crypto transactions in Nigeria happen on peer-to-peer exchanges, so once the panic dies down trading will continue as usual.

“The news has caused a panic in the crypto space, especially for new crypto investors, but the true essence of crypto is decentralization. [The] majority of crypto trades that occur in Nigeria are peer-to-peer,” Aronu Ugochukwu, chief executive officer of DeFi platform Xend Finance, told CoinDesk via an email.

9 COMMENTS

  1. I was suggested this website by means of my cousin. I’m no longer certain whether this put up is written through him as no one else realize such certain approximately my problem.

    You’re amazing! Thank you!

  2. Appreciating the hard work you put into your blog and in depth information you provide.
    It’s nice to come across a blog every once in a while that
    isn’t the same outdated rehashed material. Excellent read!
    I’ve saved your site and I’m adding your RSS feeds to
    my Google account.

  3. Hi there! Someone in my Myspace group shared this website with us so I came to check it
    out. I’m definitely enjoying the information. I’m bookmarking and will be tweeting this to my followers!
    Superb blog and fantastic design.

  4. Its such as you read my thoughts! You appear to understand a lot approximately this, such
    as you wrote the e-book in it or something. I think that
    you just can do with some p.c. to force the message house a bit,
    but instead of that, this is excellent blog. A fantastic read.
    I will definitely be back.

  5. Link exchange is nothing else except it is only placing the other person’s
    blog link on your page at suitable place and other person will
    also do similar in favor of you.

LEAVE A REPLY

Please enter your comment!
Please enter your name here