SPECIAL REPORT: CBN Outright Ban Of Cryptocurrency Transactions As Nigerians Cry Out

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 .

Emefiele: CBN Governor

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’’.

Kennedy Uzoka: Group MD, UBA, Cue Into The CBN Policy On Cryptocurrency Ban

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.

Moghalu: Opposed To CBN Ban On Cryptocurrency Transactions

 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.

Ezekwesili: Critical Of CBN, Cryptocurrency Outright Ban

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: Wants Buhari To Have A Rethink On Cryptocurrency Ban

 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.

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