Cryptocurrency traders and investors in Nigeria were thrown off balance when the Central Bank of Nigeria (CBN) announced a ban on crypto exchange transactions in Nigerian banks last Friday. The news was understandably worrisome, with Nigeria being the world’s second-biggest user of virtual currencies like Bitcoins.
This is not the first time the CBN would raise an eyebrow against the anonymity of cryptocurrencies. In 2017, the apex bank warned against the trading of Bitcoins, Ripples and other cryptos in the country. It expressed concerns that cryptocurrencies are largely used for terrorism financing, money laundering and other illegal activities. This is the same reason it is hinging the latest prohibition of crypto transactions on.
Why the ban on crypto?
According to a statement released on Sunday, Feb. 7, by the CBN’s Acting Director of Corporate Communications, Osita Nwanisobi, cryptocurrencies are used to fund terrorism and other illegal activities.
The statement reads in part, “it is on the basis of this opacity that cryptocurrencies have become well-suited for conducting many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.
“Many banks and investors who place a high value on reputation have been turned off from cryptocurrencies because of the damaging effects of the widespread use of cryptocurrencies for illegal activities.
“The role of cryptocurrencies in the purchase of hard and illegal drugs on the darknet website called “Silk Road” is well known. They have also been recent reports that cryptocurrencies have been used to finance terror plots, further damaging its image as a legitimate means of exchange.”
What are cryptocurrency platforms in Nigeria up to?
Although the ban would cause a temporary setback for the major players in the crypto exchange space in Nigeria, trading continues as usual, at least as at the time of publishing this piece.
However, most of these companies, including Patricia, Binance, Luno and Chidi14xchange, who are providing exchange services where you can pay naira to buy Bitcoin, have been forced to suspend the deposit and withdrawer of naira on their platforms inline with the CBN policy.
Business Elites Africa also has it on good authority that many of the exchange platforms are already developing alternative solutions to mitigate the CBN ban.
“We’re working something that I’m not at liberty to disclose yet. Crypto is bigger than the CBN, they can’t stop it. Our customers will find a better and easier way to cash their coins in their local fiat currency. I’ll let you know when are done developing the solution”, an inside source at one of the Nigerian crypto exchange platforms, who didn’t want to be named, told our correspondent in confidence.
In the meantime, exchange companies in Nigeria continue to appeal to their customers not to panic as they are engaging the authorities on a way out.
“…all functions as regards cryptocurrency – Bitcoin and USDT as we support are fully available. You can send and receive bitcoin and USDT as well trade with no barriers…”, Odum Chijioke John, Founder/CEO of Chidi14xchange, said in a video message to customers while announcing a temporary suspension of deposit and withdrawal of naira on the platform.