Central Bank of Nigeria Denies It Has Placed New Restrictions on Cryptocurrencies — Uses Debunked Claims to Justify New Directive – Emerging Markets Bitcoin News
Following the outcry over the Central Bank of Nigeria’s recent directive against cryptocurrencies, the institution has reiterated its position with a new statement. In the latest five-page document, the CBN stresses that the directive aims to protect the country’s financial system from the risks posed by cryptocurrencies.
However, the central bank says the directive does not impose any new restrictions on cryptocurrencies, but merely regurgitates what was said four years ago. In January 2017, the CBN issued a circular stating that the use of cryptocurrencies is contrary to the CBN’s core mandate as the issuer of legal tender in the country. However, since then, the use of cryptocurrencies in the country has increased significantly and Nigeria is now one of the leading countries in the world in terms of the use of cryptocurrencies.
Despite the obvious embrace of cryptocurrencies, the CBN’s statement seems to ignore this obvious fact. Instead, the statement relies on unsubstantiated allegations to justify the CBN’s decision to remove crypto-informants from the banking system. For example, CBN claims that all trade is completely prohibited (closed) in China as well. In another case, CBN is trying to discredit the cryptocurrency by referring to billionaire investor Warren Buffett’s infamous comments about bitcoin.
Based on these and other claims, the press release concludes that the CBN is not currently comfortable with cryptocurrencies. The central bank therefore says it will continue to do everything in its power to educate Nigerians not to use it.
At the same time, the CBN’s statement explaining the decision does not seem to be calming nerves as anger against the directive grows among banks. Some crypto players have hinted that they may have to leave the country of their birth and seek opportunities elsewhere. However, for some crypto players, such as Adedayo Adebajo, this decision by the CBN was inevitable. Adebayo, who is a director of Jel Africa, a consultancy firm, says the recent Endars protests are one of the factors that have contributed to the change in the central bank’s approach.
In late 2020, when the CBN ordered the bank accounts of leaders of the protest movement Endars to be frozen, organizers began soliciting donations in bitcoins. So donations kept pouring into Endars’ bank account, which has since inspired other activists, as Adebayo explains:
Just recently, (crypto) currencies were used to raise money for Sunday Ighoho, a pro-people activist. My question is: will the CBN resume its support for cryptocurrencies if funds are raised to support the current government? Situations like this are another reason why the decentralization offered by blockchain technology is much needed in Africa.
Meanwhile, the CBN’s decision is also being condemned by cryptocurrency owners outside Nigeria. After reports of the policy began circulating, Andreas Antonopoulos, a prominent bitcoin advocate, tweeted, for example: A disappointing policy in Nigeria.
Growth in P2P trading
However, several players in the Nigerian cryptocurrency industry strongly believe that this directive will eventually encourage peer-to-peer trading. In his response to Antonopoulos’ tweet, for example, Chris Ani, a teacher and startup consultant, stresses that the CBN directive does not ban cryptocurrencies. Instead, he said, the policy applies only to crypto-currency exchanges with banks and crypto-currency exchanges.
Meanwhile, Alexander Belov, co-founder of Coinstelegram Media and Fund, says this directive from the CBN has more to do with the state of the country’s economy. The Nigerian economy, which has been hit hard by the global pandemic, is suffering from a persistent shortage of foreign exchange.
The lack of foreign currency is forcing many people to resort to cryptocurrencies, which can be purchased on local exchanges. So by banning banks from hosting cryptocurrency units, the CBN is trying to force Nigerians back into the traditional banking channels it controls. It could also be an attempt to hide the real problems of the economy, as Mr Belov explains:
It (the Directive) simply demonstrates that countries with weak economies are willing to respond vigorously to the increasing public acceptance of cryptography in order to protect their economies and banking systems.
What do you think the end result of this policy will be? You can share your thoughts below in the comments section.
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