Nigeria Cryptocurrency Ban, Nigeria is closing all cryptocurrency accounts... All involved accounts in the transfer or any type of exchange of cryptocurrencies are to be shut down by Nigerian financial institutions. This step is happening as per the orders of the Nigeria central bank released on Friday. What's the matter, scroll down to read "Nigeria Cryptocurrency News".

Nigeria Cryptocurrency Ban
Nigeria Cryptocurrency Ban

Africa's biggest economy has matured as a huge market for cryptocurrency trading. But Nigeria's central bank has warned and notified for several years that the currencies are not regulated nor are they legal tender in the country.

Nigeria Cryptocurrency Ban

Nigeria Cryptocurrency News
Nigeria Cryptocurrency News

"The bank hereby wants to tell regulated financial institutions that trading with cryptocurrencies or facilitating/expediting payments for cryptocurrency exchanges is Banned/prohibited," it is stated in a report posted on CBN's website.

CBN declared all financial institutions and banks were instructed to classify persons and/or entities associated with cryptocurrency exchanges and close their accounts immediately.

"Breaches of this directive will attract severe regulatory sanctions," CBN said.

Nigeria is one of the countries known for corruption in the world. Here, Digital currencies are very common, they are seen as means of easing trade in a land known for corruption, currency variations and often sidelined in the history by the global financial system.

The central bank has warned traders since 2017 that the Digital currencies are not allowed and approved. The traders and investors were at risk as they were not shielded by law. Details of the new directives are included in a CBN announcement (PDF) which is presently making the rounds. 

 Is cryptocurrency legal in Nigeria?

Nigeria Cryptocurrency Regulation
Nigeria Cryptocurrency Regulation
After these new regulations, you will not be handy to use a card from a bank or any other financial institution in Nigeria to process any transactions on a crypto exchange. In a nutshell, while virtual currencies persist legal, trading them via an exchange in Nigeria is near impossible. The news rules also directed the banks to classify individuals, who are operating cryptocurrency exchanges in their systems. After classification banks are advised to close such accounts immediately.

Just to inform you, Cryptocurrency has grown popular in Nigeria from last few years. One factor for its popularity is the CBN’s rigorous rules around FX fees. 

Nigeria Cryptocurrency Regulation | Nigeria Cryptocurrency Exchange

In the month of December in 2020, the Central Bank of Nigeria ordered switches and processors to hold all internal currency transfers in respect of foreign payments through IMTOs. In the same month, Nigeria grew as the No. 2 bitcoin peer-to-peer market following the U.S with higher than $566 million worth of bitcoin exchanged amid 2015 and 2020.

The circular issued by CBN does not mean that CBN has banned virtual currencies. In fact, it has completely blocked the ability of the exchanges to trade and to collect payments from bank customers. As crypto is hardly purchased with cash from exchanges, this move of CBN is going to affect the services of businesses like Patricia, Yellow Card, BuyCoins among others. 

While there have been discussions regarding the handling of virtual currencies in Africa over the years, no one could have foretold these distinct rules.

Regulatory flip flops | Nigeria Cryptocurrency Market

Nigeria Cryptocurrency Exchange
Nigeria Cryptocurrency Exchange

The CBN has been ambivalent about governing crypto even as the asset class grows more popular. To be certain, there are real concerns in the talk about regulation, but in Africa, governors have an affinity for banning what they don’t understand or they feel it is difficult to handle. 

The Securities and Exchange Commission, that is to safeguard investors warned investors regarding trading virtual currency in 2017. In a turnaround, the S&E Commission noticed the legality of cryptocurrency as investments in September 2020.

According to the Securities and Exchange Commission, “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 proceeded 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.” 

Notwithstanding this, the CBN’s current rules have completely suffocated innovation and technology.

For now, the important thing for startups will be to transfer their funds from their banking partners in the country. And to begin some quick thinking regarding the opportunity of other markets. While the CBN has not explained publicly about the new rule, it is too early to think on the chance of a reversal. 

Regardless, it is a big bang to crypto exchanges that have shifted from niche offerings allowing only trading to even launching stable coins. It may designate yet different watershed moment in the history of governors going overboard in Nigeria

What crypto regulation looks like across Africa 

Nigeria Cryptocurrency Market

Away from Nigeria, the crypto handling communication has been continuing in Africa for a while. In Algeria, the 2018 Financial Law bans the purchase, sale, possession of virtual currency and use. 

It is identical in Morocco and Libya. In South Africa, introduced regulations are directed at shielding people from illegal crypto traders.

“South Africans will be supported by ourselves to only trade with personalities that are listed with us when buying crypto assets. We will deter – with warnings – why they should not practice a crypto wallet based, for instance, in Cyprus.”

According to Brandon Topham

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.”

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