The CBN Bill on Cryptocurrency; it's Implications and a Way Forward
As of the 5th of February, 2021, the Central Bank of Nigeria joined other countries like China, Saudi Arabia, Russia, Canada and formerly India to pass a bill banning Nigerian Banks' involvement with Cryptocurrency operations.
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What Does the Bill Mean For Crypto-Users?
The Central Bank of Nigeria, reinforcing it's circular which was released in 2017, has banned Nigerian Banks and financial institutions from having anything to do with Cryptocurrency exchange with strict penalties.
The bill stated that Banks are authorized to close accounts associated with cryptocurrencies in anyway.
What this bill does not prohibit however is the owning of Cryptocurrency. It is therefore still very much legal to own Cryptocurrency in Nigeria.
The Central Bank of Nigeria has so far not released an official reason for the passing of the bill.
Tosin Olugbenga a Nigerian Block Chain Engineer told coindesk that the CBN may have issued the directive because the rapid increase of Bitcoin's price in 2020 has made a lot of Nigerians develop interest in cryptocurrencies and a lot of them are converting their earnings in Naira to Cryptocurrency.
He said "Theyâ€™re moving money from naira to crypto. That is what the CBN sees and has taken issue with. It is not banning crypto trading. Itâ€™s just telling financial institutions not to allow their platforms to be used to buy or sell crypto on exchanges like binance".
Now although this bill does not infact illegalize the possession of Cryptocurrency, as said earlier, it still serves a huge blow to the Nigerian crypto sector.
Trading platforms like Busha, Luno and Jackocoins that serve as points of exchange from Cryptocurrency to Fiat currency and back would no longer accept deposits in Naira or have anything to do with transactions involving Nigerian Banks. Binance has already temporarily suspended deposits in Naira with effect from 7:00pm yesterday (25th February, 2021).
Nigerian stores like Regal Flowers, CloudSMS, Gigalayer, FastTech and others that accept payment in form of cryptocurrency would soon pull down the option of accepting Cryptocurrency as payment from customers.
According to some Business Analysts, the new law would affect foreign investments. In that, it would reduce the confidence of foreign investors in the sustainability of investing in Nigeria and growing it's economy.
Finally, although the bill would definitely make trading difficult if not impossible in Nigeria, it would in no way tamper with people's Cryptocurrency wallets. So your Bitcoin stash is still safe.
Possible Way Forward
The only way forward for Cryptocurrency exchanges would be through peer-to-peer (P2P) trade. This was the method adopted in India when it's Central Bank banned Cryptocurrency in 2018 after series of crimes associated with Cryptocurrency.
Crypto users would have to directly engage to trade. If you want to buy or sell Cryptocurrency you'd have to find someone interested in trading.