The CBN’s Bitcoin Ban is the Latest Instance of Nigerian Regulators Gone Drunk

What happened? 

Thanks to everyone who has reached out. We are fully aware of the newest CBN circular and are going to be working with regulators to ensure our services are compliant. All trading on our platforms continues as usual, and all user funds are safe.

— BuyCoins (@buycoins_africa) February 5, 2021

A letter from the Central Bank of Nigeria (CBN) signed by Bello Hassan (Director of Banking Supervision) and Musa I. Jimoh (Director Payments System Management Department) written to all deposit money banks, non-bank financial institutions, and other financial institutions directed the prohibition of cryptocurrencies and cryptocurrency exchanges. It also requested they identify those operating cryptocurrency or cryptocurrency exchanges and shut them down with immediate effect.

Why this matters? 

This matters for a range of reasons. In wake of the End SARS protests across the country and the clampdown on peaceful protesters, cryptocurrencies and their decentralized nature offered a route for protesters to generate resources. The government was able to beckon on the banks who froze accounts of protesters and it is plausible that the lack of control over the cryptocurrency market has factored in the rationale behind this decision.

It can also be viewed as another attempted clampdown at Nigeria’s youth population who in the context of an ever depreciating naira, a cycle of inflation, and an overall economic regression, are constantly seeking alternative forms of value and have found an answer in cryptocurrency exchanges.

The total unwillingness of the government to engage in a constructive conversation with stakeholders in its bid to build capacity and knowledge of an industry is also synonymous with the government’s general lack of tact in dealing with such regulatory issues. The country ranks second in Peer to Peer bitcoin volume in the world so it would have been more productive for it to seek to understand the industry and engage stakeholders in formulating a framework and policy that would help address whatever issues it had and ensure the country is positioned in line with best practice.

The country’s most prominent cryptocurrency exchange has assured its users that they will be protected.

Thanks to everyone who has reached out. We are fully aware of the newest CBN circular and are going to be working with regulators to ensure our services are compliant. All trading on our platforms continues as usual, and all user funds are safe.

— BuyCoins (@buycoins_africa) February 5, 2021