June 25, 2021

Reserve Bank of Nigeria is OKAY With Crypto: We Are Not Discouraging People From Trading

3 min read

The Central Bank of Nigeria apparently has no issue at all if the country ends up being a so-called Bitcoin Nation and just recently clarified that rumors of a general crypto restriction were absolutely nothing more than a misconception.

According to a report released by the regional paper Today Ng, the central bank did nothing however draw a line between crypto-related banking activities and using cryptocurrencies by the population.

To put it simply, in Nigeria traders have overall freedom to negotiate with crypto as long as they are not being used for blatantly prohibited purposes.

Crypto is Not Banned in Nigeria and It Is OK To Trade

Adamu Lamtek, the Bank’s Deputy Governor, made the explanation while speaking on behalf of Godwin Emefiele, guv of the Bank at the 30th workshop for Finance Correspondents and Business Editors; Lamtek explained:

The CBN did not place limitations on making use of Cryptocurrencies, and we are not dissuading individuals from trading in it. What we have actually just done was to forbid transactions on Cryptocurrencies in the banking sector.

The description comes in reaction to a wave of anxiousness and speculation that developed in the nation after a letter released by the Central Bank of Nigeria instructing all banking institutions in the country to close any kind of account utilized by individuals operating or using crypto exchanges services began to spread out around news websites and social media.

The Memo BSD/DIR/GEN/ LAB/14/001 was signed by the Director of Banking Supervision and released on the main site of the Central Bank. The letter states that financial institutions in Nigeria could serve any private or organization included with crypto:

“The Bank thus wants to remind regulated institutions that handling cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.
Accordingly, all DMBs [deposit money banks], NBFIs [non-bank banks], and OFIs [other banks] are directed to identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and make sure that such accounts are closed right away”.

At the time, there appeared to be no doubt about the Bank’s intents. The order was clear. Nevertheless, a few hours later, the Bank eliminated the letter from its official site, although it did not expressly reverse it or release a replacement.

letter from the central bank of nigeria

The letter sent by the Central Bank of Nigeria. Courtesy: CBN This led numerous analysts and specialists to believe that there might have been an error on the Bank’s actions, but crypto users preferred to move cautiously in the absence of clarity from the Central Bank of Nigeria.

However, the letter was sent out to financial institutions, which might be key to understand the Central Bank’s thinking. What the letter intended to state was that dealing with crypto was prohibited for banks, not for the basic population of Nigeria.

Africa is Booming in Terms of Crypto Adoption

The BCN’s declaration ends a duration of unpredictability in African markets. Nigeria is the nation with the highest Bitcoin trading volume in Sub-Saharan Africa, practically tripling its nearest rival’s volume.

According to information from metrics site Useful Tulips, Nigeria moved about $8.8 Million in Bitcoin last week. To put the figure in context, that amount is more than the combined trading volume of the entire continent.

This boom in crypto adoption has raised Africa’s appeal among different gamers in the crypto scene, from Bitcoin researchers like Matt Ahlborg to altcoin developers like Charles Hoskinson, every day there is more interest to work on usage cases for cryptocurrencies in the area.

During the Blockchain Africa Conference, Hoskinson said that Africa is about to become an essential area for Cardano’s future plans:

Over the next 5 years, our staff on the ground in Africa will likely scale from the lots to the hundreds, if not the thousands, and instead of simply having one head office, it’s most likely we’ll have at least 4 or five headquarters throughout the continent