Cryptocurrency CBN ban in Nigeria: Which African countries dey show support for Bitcoin, Dogecoin, Ethereum for di continent?

Cryptocurrency CBN ban in Nigeria: Which African countries dey show support for Bitcoin, Dogecoin, Ethereum for di continent?

Cryptocurrency CBN ban in Nigeria: Which African countries dey show support for Bitcoin, Dogecoin, Ethereum for di continent?

Wia dis foto come from, Getty Images

Even though many of im pipo dey trade in Cryptocurrency, African kontries never show di kain support wey many expect, although some don dey take small-small step to accept am.

Bitcoin, Dogecoin, Ethereum - dis na some of di popular cryptocurrency wey Africans don dey trade in and di fact say many kontries never recognize am as legal money no stop di growth.

One report by sabi company Baker Mckenzie say Nigeria na number three in di world for countries wey dey trade in Bitcoins (wey be di most popular type of cryptocurrency).

And Paxful, wey be crypto exchange platform say for 2020, Nigeria na im do crypto trading pass for Africa wit volume of 60,215 Bitcoins wey worth $566,668,692.

Some don argue say if African kontries regulate crypto, e go make am dey even more popular, and make di economy ginger. But odas reason am to be like gambling.

Make we torchlight wetin some African kontris don tok (or no tok) about di use of cryptocurrency.

Ghana

Di Bank of Ghana no recognize cryptocurrency as legal form of currency, although dem don arrange Bill to regulate cryptocurrency.

Wia dis foto come from, Bank of Ghana

Nigeria

Nigeria Security and Exchange Commission (SEC) for statement wey dem release for dia official website in 2018 say dem go regulate digital assets like cryptocurrency because ‘digital asset offerings’ like crypto-token or crypto-coin dey provide anoda wey wey pipo go fit invest or keep dia money as asset.

Dis ground breaking statement surprise many as e be say di Central Bank of Nigeria don draw ear before give kontri pipo say dealers and investors in any kind of crypto currency in Nigeria no dey protected by law, according to one CBN circular on 28 February, 2018.

For February 2021, di CBN give order say make financial instructions close down accounts of any customer wey dey involved wit cryptocurrency.

Kenya

Wia dis foto come from, Baker Mckenzie Wetin we call dis foto, Baker Mckenzie don do ogbonge work on how African kontries cryptocurrency

Kenya goment no recognise cryptocurrency because of di way e dey difficult to regulate am although dem don form task force wey go torchlight whether dem fit adopt am.

South Africa

As one of di most advanced economies for Africa, dem don dey look into how dem fit allow cryptocurrency.

In fact, di national treasury don propose say make dem change di law to recognise am. And di Crypto Assets Regulatory Working Group na im dey responsible to torchlight any law wey fit epp dem legalise crypto.

But di South Africa Reserve Bank never comot any law to give am legal backing.

Mauritius

CBN Bans Cryptocurrency Exchange in Nigeria | See How Everyone is Reacting to the News

The Central Bank of Nigeria on February 5, 2021, released a statement signed by the Director of Banking Supervision Bello Hassan and the Director of Payments System Management Department Musa I. Jomoh, prohibiting financial institutions in Nigeria from dealing in cryptocurrencies or facilitating payments for cryptocurrency exchange.

Meaning all trading of cryptocurrency in Nigeria has been banned, as all Deposit Money Banks, Non-Bank Financial Institutions and Other Financial Institutions have been directed to identify persons and/or entities transacting in or operating cryptocurrency exchange within their systems and ensure that such accounts are closed immediately. The statement added that “breaches of this directive will attract severe regulatory sanctions.”

The use of bitcoins and cryptocurrencies in Nigeria skyrocketed in 2020, especially during the #EndSARS protests when bank accounts of activists like the Feminist Coalition were blocked and other payment platforms for freelancers were banned. This made the disbursement of funds difficult, therefore leading many youths to rely on the use of bitcoins and cryptocurrencies.

Although the reason for this ban is still unknown, Nigerians have taken to social media to express their disapproval with the #WeWantOurCryptoBack as trading of cryptocurrency is a means of livelihood for many young people.

Major advantage of Crypto is you cannot stop it. Little research will have told them:

1. Merchants will ask to be paid directly in crypto

2. P2P exchanges will flourish

3. People will move volumes of crypto & #BTC in hard drives & cold chain storage. You cannot stop the future! — Tola (@adetolaov) February 5, 2021

Can’t buy crypto with Bank deposits

Can’t buy Crypto with Visa and Mastercard

Can’t withdraw Crypto to Banks

Nigeria government enough is enough #WeWantOurCryptoBack — IBOM PLAZA ❤️🇳🇬 (@ItsGreatman) February 5, 2021

You know the worst part of this, the Police will start arresting people with any of the Crypto trading Apps on their phones. They now have a justification from the CBN. Nigeria is not a normal country. — Wale Adetona (@iSlimfit) February 5, 2021

They’ve taken all the joy we have as youths in Nigeria and now they want to take Crypto away from us ,why are you silent ?

#WeWantOurCryptoBack https://t.co/nYalX1ws4P — Boy From The South (@OMagiq) February 5, 2021

As long as you don’t facilitate your crypto deals via any Nigerian financial institutions, you’re safe. Nigerian government can’t regulate crypto currencies hence they are telling their banks not to facilitate it No one can regulate a decentralized system, not even the US govt — Pastor Clinton🌚 (@Zaddy_Clinton) February 5, 2021

Personally, I feel the way funds were disbursed using crypto and all during the #EndSARS protest must have been a lingering pain for the govt. The move started with banning some payment platforms for freelancers, and now a complete ban on crypto. Such a shame! — L.A.M.Z (@OlamideTowobola) February 5, 2021

We all know the real reason behind this. Has nothing to do with crypto. — Olawale Adetula (@thetoolsman) February 5, 2021

Someone should tell the government that if they use Nigeria’s 2021 budget to buy Crypto and keep it for the next 10 months, we’d be debt free by December. — Fairly used boyfriend 💫 (@brysonadahcole) February 5, 2021

We are the leaders of tomorrow but they are trying to kill everything that is left in our tomorrow…

The stupid rules about crypto shows how greedy and dumb this country and people ruling it is!!#WeWantOurCryptoBack — O.N.Y.E.K.A.C.H.I 🆒📶 (@NwabuwaV) February 5, 2021

In 2021, CBN under Buhari govt is prohibiting all financial institutions in Nigeria from facilitating or dealing with cryptocurrency payment or exchange. This same Nigeria is among the first 3 on mobile money market, yet we can’t deal with anything crypto. This is ins*ne. — Ayemojubar (@ayemojubar) February 5, 2021

Nigeria’s Dream is to Kill the Youths, Frustrate their dreams to be successful. Every year there is a new Policy to destroy the Youths, Several companies run on Crypto will be destroyed, online transactions will be ruined & this gives Orgasm to CBN & Emefiele. Agents of Pain — Odogwu🤴 (@Daddy_Nomso) February 5, 2021

Buhari wants you to go back to farm or collect 10K tradermoni/N-power alert. That is the only right way of getting rich in this country. Anyone getting rich through Crypto, Forex, fintech or any modern business innovation is getting rich the wrong way. Buhari is coming for you — Kelvin Odense (Not Odanz) (@MrOdanz) February 5, 2021

They say crypto is the future but Nigeria don’t want it smh Nigeria don’t have future #WeWantOurCryptoBack — JEJE ✨ (@Lagospresident) February 5, 2021

The Government decided to ban crypto trading in Nigeria because it saw that its youths were making a living out of it #WeWantOurCryptoBack — Cactus Jack (@Ukaji11) February 5, 2021

Buhari is a military man. A trained strategist. All he knows is how to make order flow from top to bottom. Crypto platforms are decentralized, in opposition to Buhari’s style. This ban was only a matter of time.#wewantourcryptoback — P.article! (@isiomanb) February 5, 2021

Attack on crypto is an attack on youth demographic. They are taking away our source of income again. — Ayemojubar (@ayemojubar) February 5, 2021

Hello Sir @scottmelker

They just banned us from trading crypto currency!!! Crypto currency is not a crime!! They’re trying to control us, please support us to raise our voices against the Nigerian Government!!#WeWantOurCryptoBack — OBELENTE💐👑 (@funnyobelente1) February 5, 2021

Buhari’s Government blocked the account of EndSARS protesters in a bid to frustrate donations that sustained the protests. Young Nigerians resorted to crypto. The Government had no answer to it. Decentralization. Buhari does not want a repeat of that.#wewantourcryptoback — P.article! (@isiomanb) February 5, 2021

Create jobs? No. Open Southern borders? No. Lift the ban on rice? No. Restructure Nigeria? No. Sign PIB? No. Electoral reform law nko? No. Ban Crypto? Mhmmmm, now you’re talking. Olodo Government.#WeWantOurCryptoBack #cryptocurrency #crypto — Josh Foster (@joshfooster) February 5, 2021

ANOTHER PROTEST LOOMING ON CRYPTO CURRENCY

What exactly do want from us? What do you gain seeing the Nigerian youth in pains???#wewantourcryptoback@cenbank @MBuhari @nassnigeria @ProfOsinbajo — King Leo Shorlex™💓 (@awoniyishola) February 5, 2021

Cryptocurrency exchanges move funds from banks on the back of new CBN regulations

In what has come as completely left field, the Central Bank of Nigeria (CBN) has asked banks and other financial institutions to close the accounts of cryptocurrency exchanges. Details of the new regulation are contained in a CBN circular (PDF) which is now making the rounds.

The new regulations mean that you will not be able to use a card from a Nigerian bank or any other financial institution in the country to process any transactions on a crypto exchange. In a nutshell, while virtual currencies remain legal, trading them through an exchange in Nigeria is near impossible.

The new rules also asks banks to identify “persons and or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.”

Source: Central Bank of Nigeria’s website

Cryptocurrency has become increasingly popular in Nigeria in the last few years. One factor which has driven its popularity is the CBN’s stringent rules around FX in what has been a failing effort to stabilise the Naira.

In December 2020, the Central Bank ordered switches and processors to stop all domestic currency transfers in respect of foreign remittances through International Money Transfer Operators (IMTOs). In the same month, Nigeria became the No. 2 bitcoin peer-to-peer market after the U.S with more than $566 million worth of bitcoin traded between 2015 and 2020.

Today’s circular means that while the CBN has not banned 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.

While there have been conversations about the regulation of virtual currencies in Africa over the years, no one could have predicted these new rules.

Regulatory flip flops

The CBN has been indecisive about regulating crypto even as the asset class becomes more popular. To be sure, there are genuine concerns in the conversation about regulation, but in Africa, regulators have a penchant for banning what they don’t understand.

The Securities and Exchange Commission, whose primary function is to safeguard investors warned investors about trading virtual currency in 2017. In a turnaround, the SEC recognised the validity of cryptocurrency as investments in September 2020.

According to the SEC, “Virtual crypto assets are securities; unless proven otherwise. The burden of proving that the crypto assets proposed to be offered are not securities and therefore not under the jurisdiction of the SEC is placed on the issuer or sponsor of the said assets.”

The commission went further to say that, “issuers or sponsors of virtual digital assets shall be guided by the commission’s regulation. The general objective of regulation is not to hinder technology or stifle innovation, but to create standards that encourage ethical practices.”

Despite this, the CBN’s new rules have effectively stifled innovation and technology. A source at the SEC told TechCabal that he is not at liberty to comment on the CBN’s new rules until the commission holds a meeting.

Mum’s the word from cryptocurrency exchanges

At the moment, sources at one crypto exchange have told TechCabal that there will be no official response to the new regulation. It is not surprising, given that in Nigeria, the typical reaction when regulators pass downs stringent rules is to obey first and negotiate next.

For now, the key thing for these startups will be to move their funds from their banking partners in Nigeria and to start some quick thinking about the possibility of other markets. While the CBN has not spoken publicly about the regulation, it is too early to speculate on the possibility of a reversal.

Regardless, it is a big blow to crypto exchanges in Nigeria that have moved from niche offerings offering only trading to even launching stable coins. It may mark yet another watershed moment in the history of regulators going overboard in Nigeria.

What crypto regulation looks like across Africa

Away from Nigeria, the crypto regulation conversation has been ongoing in Africa for a while. In Algeria, the 2018 Financial Law prohibits the purchase, sale, use, and possession of virtual currency.

Source: Baker Magazine

It is the same in Morocco and Libya. In South Africa, proposed regulations are aimed at protecting people from unscrupulous crypto traders.

“South Africans will be encouraged by ourselves to only deal with people that are registered with us when purchasing crypto assets. We will discourage – with warnings – why they should not use a crypto wallet based, for instance, in Cyprus.”

This is according to Brandon Topham, the Divisional Executive for Investigations and Enforcement at the regulatory Financial Sector Conduct Authority.

“Because we have got no control over them and we’ve got no assurance that they will honour what they say they’re going to do. Nothing will really change, because a South African that wants to open up a wallet using an offshore location will still be able to do it. It won’t be unlawful – just as it’s not unlawful at the moment – but they will definitely have no security that the players they are dealing with are of a reputable nature.”