Nigeria's cryptocurrency market is set for a boost or burst as the nation's Central Bank launches a digital currency e-naira in four days. On October 1, Nigeria's Central Bank will be launching the nation's digital currency e-naira, this may mean a boom for the crypto market as exchanges who are ready to comply with the government regulation in this regard may be given license to operate in the country again.
The Central Bank of Nigeria (CBN) on July 25, 2017, issued a circular saying it would stop cryptocurrency and virtual currency transactions in Nigeria. However, the central bank said it would work to develop guidelines on how cryptocurrencies could be used in the economy. According to the circular, transactions in virtual currencies were illegal, illegal, "deceptive and dangerous". The circular said, "Virtual currencies (VCs), including bitcoins, are NOT LEGAL tender and cannot be used as real money in Nigeria." However, many enthusiasts in the cryptocurrency community in Nigeria felt that it was only a matter of time before they could be legalized in the country.
In March this year, the Nigeria CBN issued a ban on all banks in the country with a directive to stop transacting with cryptocurrency exchanges operating in the country and to have any bank account involved in crypto dealing frozen. This was after several reports on fraudulent activities and money laundering associated with the exchange platforms in the country, and to curtail the rising wave of losses by Nigerians transacting on bitcoin according to a circular issued by the CBN. With the ban on banks, some exchanges like Luno stop operating, leaving users' funds stuck on the platform. A few others like Binance quickly created a peer-to-peer exchange feature on their platform to enable users to have a way to sell and buy cryptocurrency.
Enthusiasts in the cryptocurrency community in Nigeria have hope that the ban will be lifted soon. But according to the CBN governor Emiefele, "if Nigerians want to buy and sell cryptocurrency we will create one for them", hence the virtual currency eNaira.
Before this time regulators in Nigeria have been lobbying to see a possible revision on the ban on banks. With the launching of eNaira it may fall out that any regulator or exchange that desires to operate in the country will have to make eNaira a tradeable asset on their platform. However, we can not say how exactly this development could benefit the individual, should the crypto community in Nigeria refuse the use of the new virtual currency, then it will be a burst for crypto traders in the country.
The e-naira according to a report will be a stable coin, but we do not yet know which currency it's going to be backed by, the Nigeria naira has never been stable, I wonder which stable currency it will be backed by. if they chose to back it with USD that will be a breakthrough for the nation and could see the majority buying the e-naira like crazy. On the other hand, should the eNaira be backed by the Nigeria naira as it is today, then, I could guess no one who understands how cryptocurrency works would like to use it because it doesn't make any difference from using online banking.
The launch of the virtual currency eNaira by CBN comes at a time when the majority of crypto dealers which are mostly youths are angry with the government for banning banks from allowing them to withdraw their money on several crypto exchanges. this will likely create a rift against the adoption of the eNaira. This set of people are still angry with the government, giving them eNaira is like a million jokes.
Another scenario to be expected is a force on everyone to use the e-naira in place of BTC and other cryptocurrencies as the case with the Chinese government and their digital Yuan. It will be a big problem for crypto traders in Nigeria and the crypto community at large should the Nigerian government go the Chinese way by forcing people to use the eNaira instead of BTC or any other cryptocurrency. However, regulators might find a way to make the new virtual currency available on their platform as an exit token.
In that case, instead of direct selling or buying cryptocurrency with fiat, a user has to first buy eNaira with fiat before buying other coins with it. The same will be when a user wants to sell other coins, and according to a report from CBN, banks will be the pioneer for the issuance of the new token.
Conclusion
While still being regulated in Nigeria, I cannot see any way the crypto community can embrace the e-Naira because the opportunity cost of getting it is higher than holding bitcoin, it makes no sense at all for Nigerians to buy e-Naira. Bitcoin is not the best product, but it is the first decentralized crypto coin. And we know what the word "decentralized" means. No one wants control anymore and that's exactly what the government wants to achieve with the introduction of eNaira. A medium to have control and monitor how much money an individual has on an exchange for possible taxation and other reasons they might have under the sleeve.
This is really informative hope it won't turn out to be just Nigeria thing that is not stable and reliable