Bitcoin is getting ready for a rise to the next all-time high – but the Central Bank of Nigeria (CBN) is currently reminding financial services providers that trading in cryptocurrencies is prohibited. The letter, signed by Director Bello Hassan, warns of severe regulatory sanctions for those who fail to adhere to the directive.
Hassan says financial services providers must identify cryptocurrency trading and immediately close accounts associated with that action.
„Accordingly, all DMBs, NBFIs and OFIs are instructed to identify persons and / or companies who operate or operate cryptocurrency exchanges in their systems and to ensure that such accounts are closed immediately.“
This, the bank believes, is necessary to protect against the risks associated with cryptocurrency.
Nigeria is the largest cryptocurrency market in Africa
Trading cryptocurrencies is not illegal in Nigeria. However, the CBN has a dire view of the private digital currency sector.
In 2018, they issued a statement stating that cryptocurrencies are not recognized as legal tender. They also warned that there was no going back should something go wrong.
Even so, Nigeria is still the largest cryptocurrency market in Africa. Indeed, a confluence of reasons makes Africa ripe for digital currency expansion. These include poor access to banking services, a young, tech-savvy population and the instability of the local currency.
Ekene Ojieh, director of public relations at analytics firm Buffalo Chase, addressed several of these points, saying:
“It is easy for a young country like Nigeria to adopt the use of Bitcoin because a large percentage of the population falls into the age group that is tech savvy. Although, that’s not the only reason many Nigerian youth are adopting bitcoin.
Nigerian youths are more likely to buy bitcoins or secure their assets in stablecoins because the naira, like any other fiat currency, is vulnerable to inflation.
Based on this statement, it appears that the CBN is fighting a losing battle.
Indian central bank is also taking action against Bitcoin
That said, the CBN isn’t the only central bank renewing its efforts to crack down on cryptocurrencies. Much like Nigeria, the authorities in India are waging an uphill battle to suppress the cryptocurrency industry.
The Indian Supreme Court overturned a Reserve Bank of India (RBI) decision that banned banks from trading cryptocurrencies in March last year.
However, the legislature recently presented the „Cryptocurrency and Regulation of Official Digital Currency Bill“. This law provides a framework for a central bank digital currency while banning private digital currencies.
Nischal Shetty, the founder of the WazirX crypto exchange, has stepped up his # IndiaWantsCrypto campaign. He is calling for a popular response by contacting members of parliament to oppose the bill.