Experts Predict Central Bank of Nigeria’s Crypto Prohibition Impeding Africa’s Growth

The Nigerian crypto space remains bothered with the new uncertainty the natives face with the digital asset’s ban. The nation’s central bank, the Central bank of Nigeria, recently shared a circular, which ordered financial institutions and other relevant bodies to stop aiding and facilitating transactions from exchanges and close accounts associated with virtual currency transactions.

Some years ago, the country’s apex bank had warned citizens concerning digital currency. The authority opined that the asset aided terrorism and money laundering, being the basis for the warning at that time. Now, the bank explained that the risks associated with cryptocurrencies make them unfit and risky to have as an investment, hence restricting the assets.

CBN prohibits crypto-related services

The regulator mandated all institutions to withdraw all previous services they rendered to locals who held, sold, or bought the virtual currency. Unlike 2017’s warning, the recent memo did not mention the asset’s contribution to criminal activities but only finds it unsuitable because of its asset class, being a risky investment.

The apex bank failed to explain its decision to ban the digital asset entirely within the region. Presently, crypto and crypto-related services are no longer allowed in the country. Natives expressed their displeasure on social media, especially those who are actively involved in the cryptocurrency industry.

The new ban could significantly affect the booming industry because the African country has one of the world’s largest Bitcoin trading volumes, second to only the US. A data analytics company, Coin Dance data shared its view on the growing crypto demand in the country since the nation alone has transacted thousands of BTC within the past few years, which is worth over $500 million. The country’s impressive volumes could be due to the youths’ dominance within the region, making up a large part of the nation’s population, and the rising unemployment rates.

Experts speak on the prohibition

Apart from being responsible for a significant part of the world’s Bitcoin trading volumes, Nigeria surpasses its African counterparts in its p2p trading, especially on popular platforms like Paxful and others. Another source revealed that the peer-to-peer volumes increased from its earlier $8 million weekly to around $16 million for Bitcoin alone.

Nigerians seem to prefer Bitcoin to any other digital asset because most traders transacted with that virtual asset. Some experts from that region spoke about the unexpected ban while sharing their displeasure with the government’s action.

Adebayo Thomas, an executive of think tank African Liberty, opined that the Nigerian government does not see cryptocurrencies’ importance. He believes that financial institutions are barely surviving due to the COVID-19. Citizens keeping their money as crypto could cause a further financial crisis for the nation. Statistics have shown that the pandemic could significantly affect African countries due to the growing unemployment rates.

A Binance company in Nigeria is already complying to the government’s rule by stopping deposits, as the new prohibition order commences and changes things for crypto-related businesses around the region. Another expert felt that the ban in Nigeria could influence other countries to create legislation outlawing virtual currencies.

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