Nigeria — the world’s second-largest Bitcoin market after the United States — has banned the trading of cryptocurrencies. The CBN instructed commercial banks and other financial institutions to close accounts involved in transactions with cryptocurrency exchanges.
According to a press statement by the Central Bank of Nigeria (CBN), banning cryptocurrency facilitation is necessary because they are used to commit crimes, especially terrorism and money laundering. It also referred to the Silk Road, the darknet site where cryptocurrency was used to buy drugs and other illicit goods. The CBN also claimed in its statement that the ban was necessary because of the risks involved in the speculative market, saying Nigerians must be protected.
Cryptocurrency exchanges operating in Nigeria have also ceased accepting or facilitating transactions involving the naira. Many of these platforms informed their users of the decision on social media; The CEO of the biggest cryptocurrency exchange platform in the world, Binance, used Twitter to instruct users to withdraw their naira on the exchange or convert it to cryptocurrency.
Why is this important for your organisation?
Cryptocurrency adoption is increasing rapidly in Nigeria and across the African continent as firms seek to overcome challenges associated with cross border payments and foreign exchange restrictions. So, despite this ban, we expect trading in cryptocurrency to continue, albeit through informal exchanges. However, companies need to ensure that they do not contravene these new regulations by the CBN.
Recommendations
- Ensure familiarisation with those new regulations’ issued by the CBN and follow the CBN closely. Given the backlash which followed the ban, many analysts expect that the CBN might make some amendments, as is typical with Nigerian policymaking.
- Attention should also be paid to the activities of the Nigerian Securities and Exchanges Commission (SEC), which are also working on a cryptocurrency regulation framework for the country.
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