You’ve probably heard of it, but I’ll say it again.
On Friday, the Central Bank of Nigeria sent out a circular
to commercial banks reminding them that "dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited" and ordering them to close any accounts transacting with cryptocurrencies.
What this means:
While the CBN has not banned the use of virtual currencies, it has effectively blocked the ability of the exchanges which trade them to collect payments from bank customers. Since crypto is hardly bought with cash from exchanges, this move will affect the operation of companies like BuyCoins, Patricia, Yellow Card among others.
What’s driving this?
For now, it’s likely two things: The use of crypto for illegal purposes and the desire to control monetary policy.
According to THISDAY
the CBN was recently alerted by the FBI that scammers were using cryptocurrencies to defraud people. This move is to protect people from fraud and discourage money laundering.
Also with the monthly volume of bitcoin traded in Nigeria being at par or even more than
what’s traded on the Nigerian stock exchange, the idea of digital currencies that the central bank has no control over is seen as a threat to controlling money supply and fostering economic growth.
Major crypto exchanges like Luno, Quidax, Roqqu, Bundle, Buycoins, and Binance have paused naira deposits, and in some cases withdrawals. Nigerian payment companies have suspended crypto-related transactions.
The rise of peer to peer transactions. In the absence of regular exchange channels, individuals can still transfer cryptocurrencies between each other, as long as there’s enough trust.
We’ll keep our eyes out for what comes next.