Stakeholders and politicians across different offices have confirmed that regulation is the best approach to derive benefits from the cryptocurrency market. In the coming days, Nigeria might be on a crypto regulatory end rather than banned as expected.
Senator Ihenyan, President of Stakeholders in Blockchain Association of Nigeria, revealed he has been making efforts since 2017 to engage the CBN. However, the bid to make the Central Bank of Nigeria (CBN) regulate the cryptocurrency market in Nigeria has been to no avail.
According to him, regulation is the approach most developed countries in the world have taken, which has seen some come up with a robust regulatory framework. The United States currency regulator recently allowed banks to trade in stablecoins.
Stablecoins are cryptocurrencies that attempt to peg their market value to some external reference like the US dollar. Singapore, Iceland, and Malta have become top destinations in blockchain investment because of their approach to regulating the market.
CBN directive caused an uproar on social media, while local crypto advocates wrote to the bank asking for clarification on the order. In response, the CBN published a five-page statement that included a pledge to protect Nigerian citizens from the risks of cryptocurrencies.
“The CBN will continue to do all within its regulatory powers to educate Nigerians to desist from the use of cryptocurrency. We aim to protect our financial system from activities of fraudsters and speculators,” the statement said.
However, a number of senators opposed the CBN move and an outright ban on crypto, though they spoke in favour of regulating the industry.
“The next level is cryptocurrency, and we can’t run away from it. It is the CBN’s responsibility to bring Nigerians to the next level, not discourage it.” Sen. Bassey Akpan said.
Despite its risks and dangers, crypto has its merits, Sen. Dung Gyang said. “claiming that the lawmakers want the CBN governor to brief them on the risks and opportunities that crypto offers the nation so that Nigeria won’t “miss out.”
Another senator, Solomon Adeola, said he is: “strongly against” the CBN’s outright ban on crypto and that the bank should instead be regulating the space.
Prof. Kingsley Moghalu, former presidential aspirant and deputy governor of the Central Bank of Nigeria (CBN), also said while speaking on Channels Television recently. However, the Apex bank should have chosen a better approach and provided clearer directives. The directive was a ban on financial institutions from engaging in cryptocurrencies and not on trading activities.
“Cryptocurrency exchanges are the targets. Hence, it does not criminalize individuals trading in cryptocurrencies. However, limited exchange activities will make it difficult for individuals to make transactions.
“The CBN has said it is not a legal tender, but they don’t have to tell us what we can exchange for value. If I want to give you my shirt and you give me your shoe, the Central Bank has no business with it,” Moghalu said.
The CBN directed the circular to deposit money banks (DMBs), non-financial banks, and other financial institutions. They warned banks to refrain from providing banking services to entities dealing with cryptocurrencies, including exchanges.
On Sunday, the apex bank issued a statement explaining that it did not place any restrictions on cryptocurrencies. The CBN’s circular dated January 12, 2017, had earlier forbidden all banks in the country from using, holding, trading, and transacting in cryptocurrencies Another CBN press release dated February 27, 2018 reiterated the order.
In addition, contrary to the claim that their position is not an outlier, they mentioned a number of non-related economies like Bolivia, Kyrgyzstan, Ecuador, Saudi Arabia, Jordan, Iran, Bangladesh, Nepal, and Cambodia. Other well-developed economies include Japan, South Korea, Switzerland, Singapore, Portugal, the USA, the UK, Canada, Australia, and France. They stated that all have positive dispositions towards crypto, with Germany recognising Bitcoin as a means of payment as far back as 2018.
Moghalu stated, “Aside from facilitating $500 million in transactions in the last five years, the cryptocurrency market employs hundreds of Nigerians. The market has created new value chains that the CBN decision will impact. Investors in the blockchain and other industries would not be heading to Nigeria because of the prohibition of CBN.
“For me, what is saddening is that they do not see the need to explain beforehand. And secondly, they need to pull in the stakeholders to find a workable middle ground before throwing out the baby with the bathwater,” Daniel Eze, a project manager, said.
For Moghalu, the increasing adoption of crypto in Nigeria and the instability that it brings to the economy should push the CBN to explore a different approach. The Nigerian economy is still in recession, and foreign exchange continues to be limited for manufacturers and other businesses that need it for daily operations. He also noted that the world is going digital; hence, there is a lot of innovation, and cryptocurrencies are part of that.
“My attitude would have been how can we best manage the risks of cryptocurrencies to ensure that they do not affect the stability of the financial system.
However, I do not recommend banning exchanges, given that $500 million worth of bitcoin has been traded in Nigeria recently. The Nigerian economy remains in recession, and manufacturers and other businesses continue to face limited access to foreign exchange for their daily operations. the last five years. Nigeria is one of the top ten countries in the world today in terms of the use of cryptocurrencies. In fact, it comes in at 8 after countries like Ukraine, South Africa, Kenya, and so on.
It is becoming a real factor in our financial system or investment ecosystem, and this is the livelihood of Nigerians. So when you take actions that look as if you are taking away opportunities from Nigerians, especially in a depressed economy,” he said.
Source: Independent. ng