The Central Bank of Nigeria Stands Behind Its Decision to Ban Cryptocurrencies
It isn’t challenging to see how Bitcoin and other digital currencies have broken into mainstream financial markets. Uber, Tesla, and MasterCard are merely a few financial institutions that have recently invested or embraced Bitcoin transactions. The COVID-19 global health crisis brought attention to glaring flaws within traditional financial platforms. Advancing technology has revolutionized the world of commerce by introducing alternative methodologies. Bitcoin has undeniable potential to close obvious gaps left open by fiat currencies. While many institutions have embraced Bitcoin and other digital assets, the Central Bank of Nigeria has announced plans to ban cryptocurrencies.
Cryptocurrency Ban Expected to Prevent Crimes and Reduce Risks
The Central Bank of Nigeria recently banned most cryptocurrencies, ranging from Bitcoin to Ethereum. The CBN firmly stands by its decision to ban digital currencies, stating cryptocurrencies create fraud and money laundering opportunities. The CBN specifically mentioned how cryptocurrencies could be used to purchase illegal items, such as drugs. The CNB referred to a darknet website used to purchase, trade, and sell illicit substances and illegal goods. By banning digital currencies, the CBN hopes to minimize terrorism and financial crimes.
Nigerian residents haven’t been shy to express their negative responses to the cryptocurrency ban. Several Nigerians stated the crypto ban has nothing to do with preventing crime but is an attempt to punish recent Nigerian SARS protestors. The Central Bank of Nigeria will stand by its decision to ban Bitcoin and digital assets, stating the ban isn’t a punishment for anything. During the November 2020 protests, the CBN admittedly froze the financial assets of active protest to end the protest by financially snuffing it.
Second Largest Bitcoin Market Found in Nigeria
Besides the United States, Nigeria stands as the second-largest Bitcoin market. Nigeria’s Securities and Exchange Commission also proposed plans to regulate crypto investments, but those plans were put on hold following the CBN’s cryptocurrency ban. The majority of Nigerian crypto exchanges have ceased naira transactions, despite the issue’s social media frenzy. Without the crypto market, young Nigerians face multiple financial obstacles, specifically members of the End SARS movement.
Nigerians have expressed their disdain for the crypto ban, using multiple outlets and public forums. Young Nigerian residents believe there isn’t any rationale for the Central Bank of Nigeria’s decision to halt Bitcoin transactions. In several instances, crypto activity has surpassed market gains on the Nigerian Stock Exchange. The CBN believes eliminating crypto transactions will reduce terrorism and drug trafficking in Nigeria, but skepticism surrounds the issue.
Summoning the SEC and CBN’s Governor to Weigh in on the Issue
Nigeria’s upper senate has summoned CBN’s governor to explain the crypto ban in more detail. The upper senate has also called upon Nigeria’s Securities and Exchange Commission to explain further. Nigeria’s former vice president has publicly expressed concerns that the crypto ban will push capital inflow to other countries. The crypto ban’s economic disadvantages have raised numerous red flags among Nigerian residents and high-ranking officials.
A few Nigerian senators have joined together to question the CBN’s decision to ban digital currencies. Banning cryptocurrencies puts Nigeria’s economy in a compromising position, especially after the Central Bank of Nigeria previously expressed interest in regulating crypto transactions. Several centralized institutions in Nigeria believe the crypto ban presents new risks for its growing economy. While most Nigerians support using cryptocurrencies, some individuals don’t believe the crypto ban will negatively impact Nigeria’s economy.