The Central Bank of Nigeria (CBN) released a letter directing deposit money banks (DMBs) and other financial institutions in Nigeria to close the accounts of cryptocurrency exchanges.
The apex bank asked other banks and financial institutions to “identify persons and or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.”
Nigeria is Africa’s biggest bitcoin peer-to-peer market with more than $566 million worth of bitcoin traded between 2015 and 2020. Obvious factors that have contributed to this include CBN’s stringent regulations on forex and its weakening currency (Naira).
Related Article: Top 15 Platforms to Buy Bitcoin in Nigeria
Why Now?
This is not coming as a surprise for some. The CBN made several warnings in the past about the use of cryptocurrencies.
Also, since cryptocurrency started to gain momentum again in 2020, transaction volume in Nigeria started snowballing. More Nigerians were exchanging their naira for cryptocurrencies like Bitcoin & Ethereum on exchanges.
These exchanges need to acquire FX (US dollars) from the parallel market to buy cryptocurrencies on the international market, meaning more US dollars are being taken out of Nigeria.
Related Article: 10 Things You Should Know About Cryptocurrency Before Diving In
What This Means
Basically, what this means is that individuals will no longer be able to use cards from Nigerian banks or any other financial institution to process transactions (buy or sell) on any cryptocurrency exchange.
Also, for exchanges like BuyCoins (a platform Nigerians traded over $140m worth of bitcoin on in 2020), they would have to look for other ways to store their cash as the apex bank has instructed commercial banks to close accounts belonging to all exchanges.
This new regulation affects other cryptocurrency startups like Patricia, Yellow card, Quidax, among others.
While we think it is still too early to talk about the possibility of a reversal, we are not ruling out that possibility.
What do you make of the Nigerian government’s stance again cryptocurrency? Do you foresee a reversal?