The Central Bank of Nigeria (CBN) has banned commercial banks from dealing with crypto or facilitating payment for cryptocurrency exchanges.
The cryptocurrency ban introduced by the CBN is an attack on young Nigerians
In September 2020, Nigeria Securities and Exchange Commission recognized crypto as securities with plans to formulate a concrete legal framework for digital assets.
CBN ban is also reminiscent of the actions taken by the Reserve Bank of India, back in 2018. The Indian Supreme Court reversed the order two years later.
Binance has temporarily suspended deposits in Nigerian naira following a directive by CBN
On February 5, 2021, the Central Bank of Nigeria (CBN) issued a circular that prohibits commercial banks in the country from servicing cryptocurrency exchanges. The circular instructs banks to identify and close all accounts tied to crypto platforms or operations. The circular states that dealing in crypto or facilitating crypto exchanges are prohibited. According to the CBN notice, the ruling is an extension of earlier warnings from the bank about the risks associated with digital currencies
As part of the ban, the CBN has directed all commercial banks to close accounts belonging to crypto exchanges and other businesses transacting in cryptocurrencies in the country. It also warned of stiff penalties to any bank or financial institution that fails to comply with the directive.
So far, CBN is yet to give reasons for the sudden ruling that has caused massive panic among Nigerians on social media.
The reaction of some Nigerians on Twitter:
There is a correlation between #EndSARS and this desperate move by the CBN
In September 2020, Nigeria Securities and Exchange Commission recognized crypto as securities with plans to formulate a concrete legal framework for digital assets
That was a good development and step in the right direction towards mass adoption of cryptocurrencies in Nigeria. With such positive plans from SEC what changed? Why the sudden ban from CBN? While cryptocurrencies have been popular in Nigeria, digital currencies came into national consciousness amid protests against police brutality in October 2020. At the time, the Central bank ordered the suspension of the bank account belonging to supporters of the EndSARS movement, leading to a switch to Bitcoin and crypto donations.
What will this mean for one of the biggest #crypto hubs in Africa?
Bitcoin adoption in Nigeria continues to increase and according to data from Google Trends, Nigeria is number one in the world in terms of search interest for Bitcoin.
Nigeria is in recession, Nigeria is the world headquarters of extreme poverty, and crypto has been a source of livelihood to a lot of Nigerian youths. Instead of coming up with ways to meet the need of its ever-growing populace, the current regime in conjunction with CBN placed a ban on Crypto. And now, thousands of Bitcoin and crypto entrepreneurs are on the verge of losing their livelihood.
What Next?
CBN ban is also reminiscent of the actions taken by its Indian counterpart, the Reserve Bank of India, back in 2018. Two years later, India’s Supreme Court reversed the order. Will the CBN ban be reversed? Likely
I envisage a protest against the crypto ban by CBN. Thousands of youths will be negatively affected by this move, and going to the streets with placards seems like the next point of action.
Moving Forward
While we watch to see how the situation progresses, how do Nigerians circumvent the ban on crypto? Well, most cryptocurrency transactions in Nigeria are done via peer-to-peer exchanges. Also many buy from local crypto vendors and send the money directly to them without linking it to crypto transactions. So once the social panic reduces, trading will continue as usual, though trading is still going on at a reduced rate.
This is very nasty. This is what happens when the financial power of a country is monopolized.