By Stephen Ubanna
Between 2015 and now , there had been pressure on President Muhammadu Buhari, a retired army General to ban Cryptocurrency, transactions, which is a form of digital or virtual currency transactions. The pressure became more pronounced in 2020, as the traditional foreign currency dealers in the streets of Lagos and other major cities and major international airports across the country were gradually losing the forex market to Sureremit and Kobocoin and other Financial Technology Companies in Nigeria including young Nigerians who are good in Information Technology, IT.
These local Financial Technology Companies were said to have being making remittances for clients with their own digital currencies, thus saving them the high Commission which could have been charged by the Deposit Money Banks, DMBs, Non Financial Institutions, NFIs and other Financial Institutions, OFIs, as well money transfer service operators.
The Value News was informed that their remmitances in 2020 alone,had exceeded $22 billion. The CBN, had expected to use this massive monetary inflow of foreign Capital into the country to prop up the naira but it could not because it has no control over it. There is no gainsaying the fact that the Cryptocurrencies transactions have lots of attractions for young Nigerians patronizing he digital payment systems such as ‘’under the radar profits to easy cross- border transactions’’, thus, making Nigeria as at January 2018, to be the third largest holders of Cryptocurrencies in the world.
Investigations by The Magazine shows that since 2009 and now BTC,Litecon, Percoin and Namecoin Crypto currencies had been in use in Nigeria and other parts of the world. Other Cryptocurrencies that had been developed by operators include Ethereum, Cardano, Dash, Ripple, and EOS. Some of these Competing Cryptocurrencies were said to have developed by operators as a result of the BTC success.
The Magazine findings shows that the aggregate value of all the Cryptocurrencies across the world is about $214 billion but informed bank sources disclosed that BTC alone, represents more than 68% of the total value of the currencies that had been used in the transactions . Launched by one Satoshi Nakamoto, in 2009 but as at November 2019, there were said to be over 18 million BTC in circulation in different parts of the world including Nigeria, with a total market value of %146 billion.
But the major problem of these Cryptocurrencies was the fact that they do not have a regulation system. This may have been the reason why it has been very difficult for governments and countries to regulate the currencies transactions. At present, 65 countries all over the world including the North American country of the United states, China, Honkong Japan India, Saudi Arabia, Thailand, Malaysia, Vietenam, Sisngapore, South Africa, including the European Countries of France , Ntherlands, Norway, Germany and Russia, including the United Kingdom, UK, had legalised the Crypto currencies transactions .
Information Technology experts had described the Financial technology as one of the fastest developing markets in the world but Godwin Emefiele, governor of Central Bank of Nigeria would not take it. Acting on the instructions of the Nigerian President the bank had banned the Cryptocurrencies transactions , making Nigeria, one of the six countries that had banned it . The countries that had already banned the Cryptocurrencies transactions are Algeria, Bolivia, Ecuador, Bangladesh, and Nepal.
Until the ban on the Cryptocurrencies transactions by the CBN, on the orders of Buhari, on Friday, February , 2021,one of the steps that had taken by the Nigerian government to stop its use in the country in 2015, was the directive issued by the CBN, and the Security and Exchange Commission, SEC, to Nigerians about the pitfalls in investing in the Crypto currency markets .
The warnings according to a bank source was basically to educate Nigerians about’’ the differences between the actual currencies , which are issued and guaranteed by the government and the Cryptocurrencies which are not. The government was said to have also exposed the risks resulting from the high volatility associated with the Cryptocurrencies transactions and the fact that many of the Organisations that facilitate such transactions are not regulated.
Note that one of the foreign IT Organisations, SAG IPL, a Professional IT service provider Company that had been in the business for over a decade managing ICO development and Crypto currencies projects for Clients Worldwide may have been affected by the CBN, ban on the digital currency.
. Other International IT Platforms that were said to have been affected by the ban on the crypto- currency transactions are Coinbase, Gemini, Blockfi, Robinhood, etoro, BitconIRA, Hibbtc.comand Binance. This is in addition to Kraten.com, Bitrex, Trade station, and Coinmama.com Platforms. These Platforms, the Magazine was informed allows traders to buy, sell, and trade bitcoin, Litecoin, Ethereun, Bitcoin Cash, and XRP.
Many believe that the CBN, warnings may not have made any appreciative impact on the Cryptoto- currencies trading public, as they had continued to patronise these Cryptocurrencies investing platforms, , forcing Emefiele , who was acting on the instructions of the Nigerian President to issue another strong worded directive to all the DMBS, , NBFIs, an OFIs, across the country on February 5, 2021, ‘’to close the accounts used for Crypto currency operations’’.
The DMBs, NFIs and OFIs, were said to have given a matching order by the apex bank ‘’to identify persons , group of persons or entities transacting in or operating Cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately’’.
The CBN, may have been disappointed that it could not use the massive inflow of Capital into the country through the Cryptocurrencies transactions to prop up the naira that it had banned payments to service providers, Mobile Money Operators, Switches and Processors receiving diaspora remittances. However, the bank was said to have directed the International Money Transfer Operators to make their remittances into the country in the US, dollar.
Emefiefele, who is very furious over the Cryptocurrencies transactions had warned the DMBs, NFIs and OFIs, that breaches to the CBN, directives ’’would attract ‘’severe regulatory sanctions’’. He was emphatic on the government position on the use of the Cryptocurrencies for transactions in the country. Hear him: Dealing in Cryptocurrencies, or facilitating payments or exchanges is prohited.
Bello Hassan, a CBN, Director , Banking Supervision and Musa.I. Jimoh, another Director , overseeing Payments System Management Department who were said to have signed the Crypto currencies ban circular, on behalf of the CBN, governor, had revealed that there had been similar such directives to the DMBs, NBFIs and OFIs, and members of the trading public on the risks associated with the Cryptocurrencies transactions in the past.
It was therefore, not surprising why many see the February 5, 2021, Cryptocurrencies circular that was issued to the DMBs, NFIs and OFIs, on the ban on the digital currencies for transactions as a follow up to the January 12, 2017, warnings on the risks associated with the transactions. The apex bank officials were said to have made it clear to the DMBs, NFIS and OFIs that’’ the Naira is the only legally recognized legal tender in Nigeria and not crypto currency’’.
Informed sources told The Magazine that the United Bank For Africa, UBA, plc, popular, Pan African Bank, under the close watch of Kennedy Uzoka, Zenith Bank, Gurantee Trust Bank, GTB, First Bank, Union Bank, Polaris Bank, Skye Bank, and other DMBs, in the country, had cued into the CBN, policy, to close all Cryptocurrency accounts used for transactions in their banks to avoid playing into Emefiele’s hands.
Recall that in September , 2020, SEC, had promised to develop a regulatory framework for Cryptocurrencies in the ountry but that was how far it could go. In November, 2020, officials of the ministry of Finance, Budget and National Planning were said to have held talks with the Commission on the need to provide regulatory requirements for the blockchain -based digital assets. The government had a plan to turn BTC, into a Commodity in order for it to be regulated by appropriate securities Law, an insider said.
Kingsley Moghalu, a retired Deputy governor of CBN, and former Presidential Candidate of the Young Progressive Party, YPP, in the 2019, Presidential election, had said that Nigerians traded $500 million worth of BTC or but another school of thought had put the figure at $566 million worth of 60,215 BTC, in the last five years which falls under the Buhari Administration
. Emefiiele, the CBN, governor who was said to have encouraged the Katsina state born Nigerian President to ban the Cryptocurrencies transactions in the country may have been worried that the BTC, trading volume in in Nigeria alone is growing in lips and bounds . In 2020 alone, over 20,500 coins or $451 million was said to have been traded in the country.
While the CBN and SEC, officials may have had at the back of their mind that they have crippled young Nigerians using Cryptocurrencies, in their transactions with the outright ban, the young minds appear to be thinking ahead of the policymakers as they were said to have developed new cryptocurrencies trading strategies without the knowledge of Emefiele and his other CBN, officials or SEC.
This may have informed why Oby Ezekwesili, a former minister of Education, under former President Olusegun Obasanjo, had said that what the policy makers ought to have done would have been ‘’to map out all the legitimate risks associated with the Cryptocurrencies transactions and gather a subset of the super brilliant Nigerian young minds in Financial Technology to listen and learn more from them on the management of the digital and virtual currency instead of its outright ban in the country’’.
Ezekwesili, who could not hide her feelings had said that ‘’learning is the greatest asset of the policy makers’’, noting that ‘’it is never too late’’, for them to make amend’’ to approach the super brilliant young Nigerian minds who are experts in Financial Technology and work closely with them to block all loopholes in the Cryptocurrencies transactions.
Atiku Abubakar, a former Vice President and Presidential Candidate of the Opposition Peoples Democratic Party, PDP, in the 2019, Presidential elections, which was won by Buhari, of the ruling All Progressive Congress, APC, had said that ‘’it is wrong for the CBN, to have issued such a circular to the DMBs, NFIs and OFIs, banning the Cryptocurency payments at this time around that there is high level of unemployment in the country’’ which the government have not been able address over the years.
Appealing to the Nigerian President to have a rethink on the ban on the Cryptocurrency transactions, he had cited the National Bureau of Statics recent reports which indicated that the ‘’foreign inflow of Capital into Nigeria was at a four year low, having plummeted from $23.9 billion in 2019 to $9.68 billion in 2020’’.
The former Nigerian Vice President and business mogul, noted that ‘’the nation has suffered much, economic losses from the 19-month border closure with the neighbouring West African countries of Benin Republic, Niger and the Central African country of Cameroon, and the the Asian country of China emerged coronavirus , popular, COVID 19 and therefore, could not afford to suffer another round of economic losses.
Moghalu, a former CBN, top official had said that’’ regardless of the risks involved in trading in Cryptocurrencies it should not be a justification to ban it outright’’ by the government’’. He opined that a lot of activities in the world are going digital and Nigeria could not afford to lag behind, stating that it is one of the 10 top countries in the world today using Cryptocurrencies.
He was said to have told those that cares to listen including policy makers that BTC and other Cryptocurrencies ‘’ is becoming a real factor in the country investment ecosystem as well as the livelihood of many Nigerians and therefore could not be stopped.
He may have alluded to Emefiele’s fear’s about the depreciation of the value of naira , stressing that regular currencies depreciate in value as against the Cryptocurrencies such as BTC. According to him many policies from the apex bank in the last five years have not been favourable to Nigerians. Moghalu, who could not hide his feelings had urged the Nigerian President ‘’to try and make the country’s investment climate to be more friendly and efficient than it is now’’. ‘’It is unfriendly and that is why the foreign invetments is declining’’, he insists.
Prior to the ban on the use of the Cryptocurrencies for transactions in the Nigeria, there were news making the rounds that the government have an ambitious plan’’ to have a digital Nigerian blockchain platform that would facilitate national Cryptocurrency adoption with ‘’the vision of creating a digital Nigeria’’.
Officials of the ministry of Communications and Digital Economy and the National Information Technology were said to be Collaborating to develop a blueprint for the nation blockchain adoption, described as a document for the Nigerian President to further diversify the economy.
But with the outright ban on the Crypto Currency transactions by the CBN,on the orders of the Nigerian Prsident, on February 5, 2021, many believ that it would forestall implementation of the proposed Nigeria blockchain platform for transiting into a digital economy in the country.