Bitcoins

CBN Regulation on Bitcoin. What is the way forward?

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It is no longer news that the Central Bank of Nigeria of the Federal Republic of Nigeria on the 5th of February decided to place a ban on Cryptocurrency. The Central bank has stopped all banks and financial institutions from dealing in Cryptocurrency or facilitating payment for Crypto exchange. The CBN said that the letter was only a reiteration of the bank’s position on crypto since 2017, not placing a new restriction.

According to local reports, the decision made was due to the warning received from the Federal Bureau of Investigation in the United States of America concerning the activities of some fraudsters that use cryptocurrencies to bring hundreds of millions of US dollars that have been illegally obtained from the USA into Nigeria.

One other suspected reason for this decision is the use of crypto during the #ENDSARS protest. Because a lot of restrictions were made on people’s accounts, people resorted to crypto as a way to evade this restriction.

Nigeria is not the only country that has banned Cryptocurrency transactions. Other countries such as Morocco, Iran, India and others have also taken this decision.

How does the ban affect us?

Now, we might be wondering, we all thought that cryptocurrency cannot be banned, that’s what makes it special in the first place, isn’t it? So how then, is the CBN doing it? Bitcoin and other cryptocurrencies are indeed above regulation but what the CBN has done is to place restrictions on how people can buy and sell cryptocurrencies in Nigeria.

What this ban basically does is that it prevents Nigerians from being able to fund and withdraw from their accounts in crypto exchanges.  It doesn’t criminalize the ownership of crypto, it just makes trading more difficult.

What then, is the way forward?

We should know that the ban is not a direct ban on cryptocurrency. It would just be like placing a ban on the dollar and other currencies. What it does is to ensure that organizations regulated by the CBN no longer facilitate crypto transactions.

The way forward appears to be a peer-to-peer (p2p) transaction. The p2p market has always existed and currently, that is the only choice we have. The major disadvantage of this p2p transaction is there will be more cases of fraud.

Even though the cryptocurrency industry has taken a few steps back instead of forward with this decision, we can only hope for a better time.