The Central Bank of Nigeria orders ban on cryptocurrency in Nigeria in its most recent communication through a circular that was published on Friday. It has ordered deposit-taking banks and other financial institutions to close accounts of those people that are associated with trading and purchasing of cryptocurrency in the country.
The communication about the ban on cryptocurrency in Nigeria that came as a shock to many was made abruptly as no one was informed prior. The Central Bank went ahead to threaten severe action against any financial institutions that did not act accordingly and continued to cooperate with those dealing in the digital currency.
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However, because of the nature of cryptocurrency that is it operates in a decentralized system. This simply means there is no single unit in control of the whole system, as there is no single unit in charge of the system cryptocurrency cannot be regulated and therefore cannot be banned. This is one of its greatest advantages and that is why it continues to become popular in different parts of the world.
The financial authorities in Nigeria already knowing this decided to limit operations of other financial institutions with people who deal in cryptocurrency. Any banks and other financial institutions that are found to be holding accounts for those in this trade will be dealt with severely.
Such a regulation means that people with digital currency will not be able to exchange it for the Nigerian currency making their money almost useless. It can only facilitate purchases ad payments that accept money in cryptocurrency.
Many have noted the ban on cryptocurrency in Nigeria as a huge block in innovation and technology advancement in Nigeria. As many African countries struggle to be on the same playing field as the rest of the world when it comes to innovativeness, it seems the governments are always in the way of such growth through their limited contribution towards innovative projects and coming up with regulations that limit technological growth. In 2020, Nigeria was named the second-fastest-growing market for Bitcoin after the United States.
For now, only Peer 2 Peer transactions can take place that is trading the cryptocurrency amongst themselves since its ownership has not been criminalized.
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Why the ban on cryptocurrency in Nigeria
It is still not clear what could have caused the abrupt regulation as many Nigerians can only speculate. Some people attribute it to the EndSars protests that shook the country in October last year. As the organisers gathered funding for the protests the country blocked their bank accounts leaving them with the alternative of cryptocurrency that saved the day. In a number of countries where digital currency has been banned, the governments explain that digital currency cannot be regulated because of its nature which poses risks like attracting criminals to do their money laundering work.