Anxiety has gripped the Nigerian cryptocurrency markets as the country’s supervisory bank has ordered banks to close all accounts related to such. The implication of this is that banks in one of Africa’s largest economies will no longer allow transactions in Bitcoin and other cryptos.
In a circular sent by the Central Bank of Nigeria [CBN] to all banks and monitored by media houses, all accounts maintained by crypto exchangers are to be closed forthwith. No exact reason was given for this order that is now generating tension in the West African country.
The circular signed by the CBN Director of Banking Supervision, Bello Hassan; and the Director of Payments System Management Department reads thus:
“The Central Bank of Nigeria circular of January 12, 2017 ref FPR/DIR/GEN/CIR/06/010 which cautioned the Deposit Money Banks, non-bank financial institutions, other financial institutions and members of the public 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 with 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.
“The letter takes immediate effect.”
As expected, criticism has started trailing the CBN’s order, with individuals and interest groups expressing shock at the development. Nigeria’s former Vice President Atiku Abubakar in his reaction called for a reversal of the order.
In a statement signed personally by Atiku and made available to newsmen, the former number two man said: “We need to open up our economy, not close it.”
“What Nigeria needs now, perhaps more than ever, are jobs and an opening up of our economy, especially after today’s report by the National Bureau of Statistics indicated that foreign capital inflow into Nigeria is at a four year low, having plummeted from $23.9 billion in 2019, to just $9.68 billion in 2020,” Atiku said per The Punch Newspapers.
2017 was the year cryptocurrencies started gaining grounds in Nigeria, rising from $900 in January of that year to almost $20,000 by the end of the year. Startups started to emerge; and this provided platforms for various financial solutions using the crypto technologies. If the 2017 was the breakthrough year for Bitcoin and other cryptos in Nigeria, what would one say about 2020?
In 2020, estimates from BuyCoins, one of the early exchangers to hit the market in 2017, and one the biggest in Nigeria, showed that total volumes of Bitcoin traded in Nigeria stood at $200 million per month. That figure alone is more than what was traded on the Nigerian Stock Exchange ($131 million) in Q2’2020.
The question is: would the government reverse itself and lift the ban considering the outcry by concerned and well-meaning individuals?