As a result of the Federal Government ban on Cryptocurrency-related transactions in the country, some Nigerians are ‘in tears’.
Nigeria’s central bank directed banks and other financial institutions to immediately shut accounts used to transact in or operate cryptocurrency exchanges, calling such deals “prohibited”. CBN’s letter that was sent out on the 5th of February 2021, informed local banking institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited under a 2017 circular stating that bitcoin (BTC) and other cryptocurrencies are not considered legal tender in the country. The country’s Securities and Exchange Commission had in September stated that it would regulate trade in digital currencies to provide protection for investors, and to ensure that transactions are transparent.
However, here’s the irony;
Nigeria, after the US, is known as the 2nd largest Bitcoin investor. It was this same Bitcoin that saved the day when the government blocked demonstrators from usingv local payment sites to raise donations for funding during the #Endsars protests against police brutality in Nigeria that occurred in October 2020.
Some may not see the implications that the cryptocurrency ban has on the country and its citizens as a whole. Some may not even be interested in how it might affect them because as far as they are concerned “it’s not their problem”. But for the regular Nigerian citizen that deals with cryptocurrency, there are implications that every citizen of Nigeria should also be aware of, and here’s why:
First of all
The crypto market is independent of the world economy, meaning it does not need banks to function, therefore, this would increase the purchasing power of the naira. As all currencies depend on each other such as the naira on pounds, pounds on dollars, dollars on the naira, the cryptocurrency is independent and does not depend on any other currencies. Therefore, this would stimulate a lot of in-house trade, with more of the naira circulating within Nigeria. So, if there is no circulation of naira around the world, the currency would be devalued. What the government is trying to do is to reduce the foreign trade to meet their target of a particular amount in their treasury reserves, basically trying to reduce the amount of foreign trade.
Mostly, those that would be greatly affected by this ban, are retail investors or Nigerian hedge funds that have traded in cryptocurrency. They would lose all of the money used for the licensing required to put the crypto access on their platforms. Companies such as Flutterwave, Paystack, and Monify that partner with crypto, cannot continue to provide access to direct transfer transactions and processing of debit cards because of this ban.
The most obviously affected by this cryptocurrency ban in Nigeria are those that have made lifetime investments in cryptocurrency who would not be able to cash out.
This cryptocurrency ban in Nigerian was probably a distress call so the CBN meets its target of resources in the country’s treasury reserves, with some people saying it’s just part of the usual preamble to getting all stakeholders to the table for negotiations.
All things considered, this cryptocurrency ban in Nigeria may not last for long because hopefully some notables who shall remain anonymous for obvious reasons probably have cryptocurrency somewhere… lol.