Crypto holders and users are in for a tough time following the series of litigations by the US SEC against popular and top Crypto exchanges in the Crypto space. This is coming in just as BTC was showing signals for a bullish run. The news of these litigations has put the Crypto market on reverse gear, bringing mixed feelings and fear into the Crypto space.
On the news, things are not looking right now for Crypto. Binance has been charged for criminal cases by the US government, KraA circular released on the 5th of February 2021 and distributed to all financial institutions, the apex bank warned all local financial institutions to stop making any transactions involving Crypto or facilitating payment for Crypto exchanges. More so, financial institutions were also mandated to immediately and forthwith closed down accounts of persons or institutions transacting in or operating cryptocurrency exchanges.
The situation
This is a serious blow to most Crypto lover like me. If the few cryptocurrencies exchanges in Nigeria are sanctioned or prevented from operating, Africa and the world would lose a huge Crypto market. Nigeria ranks among the top countries in cryptocurrencies business in Africa and the world. Considering that, the CBN directives will have a huge negative impact on the international Crypto community, given the fact that Nigeria as the largest Africa's economy is home to over 200 million people, mostly young who has the highest interest in cryptocurrencies globally. Should this policy be implemented it will cut off millions of hungry youths whose sole means of survival is in demand for cryptocurrencies.
Exchanges such as Luno, Binance, and Quidax has been a major platform for investment for many young Nigerians who finds cryptocurrencies as a means of escaping the ravaging poverty in the country. A hungry man is an angry man, should the government takes away the means of survival from the youths there is bound to be trouble in the land.
As it now, buying any cryptocurrency from an exchanges through bank cards have been put on hold, only withdrawals are enable on most exchanges who has updated their clients. Trading in cryptocurrencies for new deposit cannot be possible from now until further arrangements are quickly put in place by various exchanges.
An old strategy revived
This is not the first time that the Nigeria apex bank will issue such a stem notice. In 2018, exactly three years back, the central bank had issued a statement describing cryptocurrencies as illegal and such not a legal tender. It was stated then, that no cryptocurrencies is licenced or regulated by the CBN and hence people should desist from making transaction or investing in any. That also happened during a bullish run for cryptocurrencies especially Bitcoin when the price went up to an all high of $17000 at that time. Despite the restrictions millions of people especially the young in Nigeria went investing and making a living from cryptocurrencies.
Can the CBN be able to stop cryptocurrencies trading in Nigeria this time?
The CBN as the apex bank has control over the banking sector in the country and can use its powers to decide the freedom banks gives their customers to use bank accounts for transactions. Though cryptocurrencies are virtual form of currency, it still cannot function without relying on the Fiat currencies for determining value and ownership. To buy any cryptocurrency as a starter you have to pay using bank cards which is tied to your account. For this, Nigerians looking to get involved in cryptocurrencies will have to find alternative means of payment outside the banking sector, should the new directives be implemented by Nigeria banks.
Some of the ways banks can stop Crypto trading in Nigeria
Over the years, the Nigeria government has been able to gather relevant and intricate information of citizens through bank accounts and can readily used those information to track individuals who engaged in Crypto dealings through the banks. Some of the ways banks can use customers information to halt Crypto trading include below.
* KYC information
KYC information can be used by the banks to determine which account of their customers is being used for cryptocurrencies related transactions. Once this is know they can block such account restrict it from recieving further funding.
* Placing a no-debit on users accounts
A no- debit means money cannot leave the account. In this case should a user decided to transfer money to a Crypto trading platform, the money wouldn't reach the destination, it will be struck and could even be lost.
* Using BVN
With the BVN all banks customers in Nigeria has their bio-data captured with the banks. This bio-data information can easilly be used by banks to track how customers use their funds in their bank accounts.
Excert of the CBN directives
“The Central Bank of Nigeria’s (CBN) circular of January 12, 2017 ref FPR1DIR/GEN/C1R106/010 which cautioned Deposit Money Banks (DMBs), Non-Bank Financial Institutions (NBFIs), Other Financial Institutions (OFIs) and members of the pubic on the risk associated with transactions in cryptocurrency refers.”
“Further to earlier regulatory directives on the subject, the Bank hereby wishes to remind regulated institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.”
“Accordingly, all DMBs, NBFIs and OFIs are directed to identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.”
“Please note that breaches of this directive will attract severe regulatory sanctions. This letter is with immediate effect.”
Conclusion
The Nigeria apex bank directives is a direct assault on the quest to financial freedom and victory over poverty in the country. The very reason why cryptocurrencies were invented in the first place was to be a peer to peer payment system, stop any regulator, eliminate middle men or third party from getting in between transaction from one person to another, and give financial freedom to the people. As one has said elsewhere, you can only delay the process but you cannot stop the future. Cryptocurrency is the future of money.
The solution: to sell goods directly against BCH, without the detour via exchanges and bank accounts. The detour via exchanges and bank accounts only costs money and is cumbersome. Bitcoin was developed to transfer money directly from person to person and not to speculate on the exchanges or to exchange for fiat.