Earlier this year, The Central Bank of Nigeria released a statement prohibiting financial institutions in Nigeria from dealing in cryptocurrencies or facilitating payments for cryptocurrency exchange. That all changed in 2020 when prices started to pick up. Notify me of follow-up comments by email. Taking the cue, some cryptocurrency exchanges have begun consideration of the migration of their companies to other crypto-friendly jurisdictions. Nigeria’s Securities and Exchange Commission (SEC) says it is working with the Central Bank of Nigeria (CBN) for better understanding and regulation of cryptocurrencies in the country. In the meantime, they have deactivated Naira deposits and Naira withdrawals from the exchanges. As the use of cryptocurrency booms across Nigeria and Africa in general, the number of crypto scammers is also increasing. Fast forward to today, four months later, and the CBN is doing something almost contradictory to the SEC’s move. It is needless to state that cryptocurrency is powered by blockchain. Central Banking and the Cryptocurrency Challenge - Call it like it is - by Tope Fasua, Feb 07, 2021. Consequently, the trading of cryptocurrency with the Naira is henceforth prohibited. According to the CBN, “dealing in crypto currencies or facilitating payments for cryptocurrency exchanges is prohibited”. BUSINESS ROUNDUP: Nigerian companies borrowed N1.11tn in 2020; IMF backs CBN ban on cryptocurrency; other stories Latest News IPOB alleges secret killing of … By a Circular dated 5 February 2021 believed to have emanated from the the Central Bank of Nigeria (CBN), the apex Bank directs banks and other financial institutions to disscoatiate themselves from cryptocurrency transactions on the basis that it is prohibited. The outright ban of Naira-backed cryptocurrency trading significantly restricts the potential growth of Nigeria’s burgeoning cryptocurrency industry, which accounts for the world’s second-largest Bitcoin trading volume and the 8th country with the highest adoption of cryptocurrency in the world. Unfortunately, it has also exposed the seeming cluelessness of the regulators who have struggled to keep up with the rapid developments in the industry. Related: 5 questions to ask before investing in Cryptocurrency. 72,000,000 XRP Ripple is on the move, and a portion of it is being sent to the broad ODL Corridor. However, the regulator guarantees that stakeholders will be aware of the results of its engagements with the CBN. Having a wide knowledge of critical matters, he can craft the best solutions in every writing circumstance. On February 5, the Central Bank of Nigeria (CBN) released a circular addressed to banks and other financial institutions with the directive that transactions in cryptocurrencies and facilitating payment for cryptocurrency exchanges were prohibited. The IMF Resident Representative for Nigeria, Mr. Ari Aisen, made this known yesterday during a virtual briefing on the recently published 2020 Article IV IMF Staff Report for Nigeria. He said that the anonymous nature of cryptocurrency, which made it prone to financial crimes, justified the ban. This would have afforded the CBN a better opportunity to understand the risks and more so, the opportunities for the country to explore the industry. The CBN’s power to regulate the activities of financial institutions is being wielded capriciously to abort what has been described as the future of the global financial industry. The Central Bank of Nigeria (CBN) has responded to the public concern raised by its regulatory directive on cryptocurrency trading in the country. Number of unique addresses in DeFi has increased tenfold; here’s why. Approximately $10B in cryptocurrency has been liquidated when Bitcoin failed to $51K. 4. Official: SEC working with CBN on cryptocurrency regulation. The CBN had also warned deposit money banks and other financial institutions against dealing with cryptocurrency exchanges, starting that the digital asset isn’t a legal tender in Nigeria. While the CBN is empowered by the Banks and other Financial Institutions Act to regulate the activities of financial institutions, including the facilitating of payments for cryptocurrency exchanges, it has no power to regulate ownership, use, or transfer of cryptocurrency. Sorry, your blog cannot share posts by email. Share 0. The operations of Cryptocurrency have come to stay in the country, despite the recent ban imposed on the digital platform by the Central Bank of Nigeria (CBN). Although the rationale for the CBN’s decision is yet unknown, there are indications that it may not be unconnected with foreign currency controls and the 97% drop in remittances through official channels, between January 2020 and September 2020. 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Augur, Dogecoin, Monero Price Movement Analysis for 24th February 2021, US Senator-Elect Cynthia Lummis Wants Congress to Leave Bitcoin Alone, Litecoin, Ontology, VeChain Price Movement Analysis for 3rd March, 2021, The XRP Community’s Reaction to the SEC’s “Sleazy” Move, Futures, Perpetual Swaps, and Options on Bitcoin Explained, Chainlink Breaks Through Crucial Overhead Resistance at $35, Resuming Uptrend, Mike Novogratz Stands By His XRP Criticism: “I Did Not Bring a Lawsuit Against Ripple”. Notably, the prohibition of trading cryptocurrency through withdrawal or deposit of money to a financial institution is clearly different from the prohibition of ownership of cryptocurrency. Osita Nwanisobi, CBN Acting Director of Communications said that the directive was only a reminder of an earlier directive in 2017 banning cryptocurrency transactions. I went below poverty line in 2020. Print Email. While blockchain technology has other uses, it was primarily developed for a cryptocurrency – Bitcoin. Notwithstanding the justification, the hastiness with which the decision was reached, particularly without an attempt to engage the industry, is unbecoming of a regulator of the financial industry. This confirmation from the IMF thus corroborates what the Central Bank of Nigeria (CBN) has been saying about cryptocurrency transactions in the country. In February 2021, the apex bank issued a circular to commercial banks, directing them to close all bank accounts linked with crypto trading. He can be reached at phillipsadeola@gmail.com. The securities regulator also stated that, as a result of a CBN directive released on February 7, 2021, the crypto guidelines issued in September 2020 are still in effect. Bitcoin to end April over $90,000? Denwigwe Blossom is a top-notch writer from Nigeria who gives the best report with the touch of excellence. Search Menu. A report by crypto watchdog, Whale Alert revealed that scammers stole $24 million worth of Bitcoin from victims in the first six months of 2020 alone. Fast forward to today, four months later, and the CBN is doing something almost contradictory to the SEC’s move. CBN Ban On Cryptocurrency: A legal Analysis By Olayanju Philips, Click to share on Facebook (Opens in new window), Click to share on WhatsApp (Opens in new window), Click to share on Twitter (Opens in new window), Click to email this to a friend (Opens in new window), Click to share on LinkedIn (Opens in new window), 5 questions to ask before investing in Cryptocurrency, Fidelity Bank Appoints Nneka Onyeali-Ikpe As New CEO. This confirmation from the IMF thus corroborates what the Central Bank of Nigeria (CBN) has been saying about cryptocurrency transactions in the country. Why traders should invest in cryptocurrencies such as Tezos, Chainlink, Dogecoin, and others. Following this, it may then attempt to regulate the cryptocurrency industry, by developing stopgaps to mitigate these risks, while ensuring Nigeria cultivates the strong interest of its teeming population in cryptocurrency. Coinbase stakeholders sell approximately $5 billion in COIN stock soon after it is listed. Nonetheless, Yuguda argues that the SEC is “very supportive of fintechs” because the regulator “invested so much in developing a framework for supporting fintechs in various areas.” He goes on to say: In all other areas, nothing has changed, but in the area of crypto assets, you know that with the recent prohibition by the CBN on access to Nigerian bank accounts by crypto exchanges, that market has been disrupted. Reactions to a recent circular by the Central Bank of Nigeria reminding financial institutions that the ban on cryptocurrencies, aka cryptos, was still in place have been fast and furious. This Tweet has just erased $288 billion from the cryptocurrency market cap. In his most recent remarks, Yuguda tries to reassure the crypto sector by saying that the regulator would “continue to engage players and support them to operate lawfully.” Finally, the SEC states that it wishes to “insure the delivery of safe products and services without stifling innovation.”, According to Chainlink (LINK) market research, the latest uptrend was also broken at the $44 high. The Securities and Exchange Commission (SEC) is working with the Central Bank of Nigeria (CBN) on the regulation of cryptocurrency. Bitcoin failed below $60K — What’s behind the price drop? A better approach may have been to utilize its recently created regulatory sandbox for the payments system to understudy the use cases of cryptocurrency within the system. In fact, the global cryptocurrency scene hit a rough patch in 2019 as prices crashed. fears of the Central Bank of Nigeria are valid, it has been argued that there are alternative strategies that the CBN could adopt in addressing the local cryptocurrency ecosystem rather than adopting an outright prohibition. […] Central Bank of Nigeria | Featured Articles: Again, CBN warns on Virtual Currencies - CBN, Feb 28, 2018. CBN’s move is puzzling, especially considering that cryptocurrency is gaining mass adoption and platforms exist to check fraud when using the digital currencies. That all changed in 2020 when prices started to pick up. Remarkably, the CBN’s approach to cryptocurrency differs from that of the Securities and Exchange Commission (SEC) and the National Information Technology Development Agency (NITDA), both regulators of the Federal Government of Nigeria, and calls into question the policy coordination of the government. Ihenyen, once more, points out that no one is still sure why the CBN took that action and raises many legal questions. Peter Schiff predicts the DOGE will reach $1 and proposes that Twitter avatars wear laser beams. Since then, the CBN has been relatively quiet on the matter. It encouraged Nigerian cryptocurrency enthusiasts but in a surprising twist, the Central Bank of Nigeria (CBN) recently directed all financial institutions to discontinue cryptocurrency exchanges and close accounts associated with cryptocurrency exchanges. The recent crypto ban by CBN is evidence of this. A year later, in 2018, they “warned” Nigerians again that we would not be able to get legal help if the cryptocurrency space crumbles. The recent crypto ban by CBN is evidence of this. The necessity of balancing regulation with innovation has risen in recent years with the exponential growth of Nigeria’s FinTech industry, which has attracted significant interest from foreign investors. As a result of the resulting chaos, the SEC was forced to drop its crypto rules and show support for the CBN’s decision. The Securities and Exchange Commission (SEC) of Nigeria has reported that discussions with the Central Bank of Nigeria (CBN) about cryptocurrency legislation are pending. In making its’ case, the CBN listed other countries, including China and Canada, which have placed restrictions on cryptocurrency trading. In 2020, crypto marketplace, Paxful, reported that Nigeria led Africa in peer-to-peer trading in 2020. The Central Bank of Nigeria has directed banks in the country to close all cryptocurrency-related accounts.. It formalised cryptocurrencies as “securities” in a statement released in September 2020. Although the rationale for the CBN’s decision is yet unknown, there are indications that it may not be unconnected with foreign currency controls and the 97% drop in remittances through official channels, between January 2020 and September 2020. KogoCrypto | Latest & Breaking News from Cryptocurrency | Bitcoin | Altcoin | Blockchain | other finance, Get the latest headlines, top stories and breaking news on Blockchain, Cryptocurrencies – Bitcoin,Etherum, etc.,Faucets, Fiat market and general finance around the world at KogoCrypto.com. When and where did this stock market peak? According to a report from the News Agency of Nigeria (NAN), a market survey conducted at various wholesale and retail shops in the eastern zone shows that the price of the product has almost doubled when compared to the price in 2020.. What the cement traders in the eastern states are saying. A year later, in 2018, they “warned” Nigerians again that we would not be able to get legal help if the cryptocurrency space crumbles. As a Techpoint Africa survey shows, 24 of 26 respondents became cryptotraders between 2017 and 2020; 60% of this figure falls between 2019 and 2020. 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