The CBN’s Bitcoin Ban Is The Latest Instance Of Nigerian Regulators Gone Drunk

The CBN ordered custodians and other financial institutions to immediately close accounts that operate or operate cryptocurrency exchanges.

What happened?

Thanks to everyone who has reached out. We are fully aware of the newest CBN circular and are going to be working with regulators to ensure our services are compliant. All trading on our platforms continues as usual, and all user funds are safe.

— BuyCoins (@buycoins_africa) February 5, 2021

A letter from the Central Bank of Nigeria (CBN) to all depository banks, non-bank financial institutions, and other financial institutions signed by Bello Hassan (Director of Banking Supervision) and Musa I. Jimoh (Director of the Department of Payment System Management) introduced the ban on cryptocurrencies and cryptocurrency exchanges. He also asked them to identify those running cryptocurrency or cryptocurrency exchanges and shut them down with immediate effect, saying such transactions are “prohibited.”

Why is that important?

This is important for several reasons. Following protests against SARS across the country and crackdown on peaceful protesters, cryptocurrencies and their decentralized nature have given protesters an opportunity to generate resources. The government was able to signal to banks that the protesters’ accounts have been frozen, and it is plausible that the lack of control in the cryptocurrency market has taken into account the reasons behind this decision.

It can also be viewed as yet another crackdown on the Nigerian youth population who are constantly looking for alternative forms of value and have found an answer in the cryptocurrency exchange against the backdrop of a constantly depreciating naira, an inflation cycle, and macroeconomic regression.

The government’s complete reluctance to engage in constructive discussions with stakeholders in order to build industry capacity and knowledge is also synonymous with the government’s general lack of tact in addressing these regulatory issues. The country ranks second in the world in terms of peer-peer bitcoin volume. Therefore, it would have been more productive to understand the industry and involve the stakeholders in formulating a framework and policy that would help resolve the issues and ensure that the country is positioned in accordance with best practices.

The largest cryptocurrency exchange in the country has reassured its users that they will be protected.

Thanks to everyone who has reached out. We are fully aware of the newest CBN circular and are going to be working with regulators to ensure our services are compliant. All trading on our platforms continues as usual, and all user funds are safe.

— BuyCoins (@buycoins_africa) February 5, 2021