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How People Are Navigating CBN’s Crypto Ban In Nigeria

How People Are Navigating CBN’s Crypto Ban In Nigeria

When the Central Bank of Nigeria (CBN) placed a ban on cryptocurrencies in Nigeria, one would have thought that was the end of trading and the usage of digital currency.

But the reverse has been the case, as people in the West African country have adopted peer-to-peer exchanges.

It would be recalled that in last year’s February, the apex bank released a ruling that orders all financial institutions to stop facilitating crypto transactions and desist from transacting with entities engaging in digital assets.

Amongst other things, CBN cited corruption, terrorism, and scam, as the reasons behind his ban of cryptocurrency in the country.

A statement from the apex bank relating to the ban, read: “The recent regulatory directive became necessary to protect the financial system and the generality of Nigerians (including the youth population) from the risks inherent in crypto assets transactions, which have escalated in recent times, with dire consequences for the integrity of the financial system and financial stability.

“Due to the fact that cryptocurrencies are largely speculative, anonymous and untraceable they are increasingly being used for money laundering, terrorism financing and other criminal activities.

“Small retail and unsophisticated investors also face high probability of loss due to the high volatility of the investments in recent times.

“In light of these realities and analyses, the CBN has no comfort in cryptocurrencies at this time and will continue to do all within its regulatory powers to educate Nigerians to desist from its use and protect our financial system from activities of fraudsters and speculators.”

What you should know about crypto in Nigeria

Even though the Governor Godwin Emefiele of the central bank’s administration, had banned crypto in the country, BizWatch Nigeria understands that there is no law that presently backs that up.

What this means is that while no law governs crypto in the country, it is not a criminal offence to use or trade in digital assets. Just that it is blacklisted in financial institutions that operates within the shores of the country.

Contrary to popular opinion that the ban would be the end for crypto in the country, many people in the country still makes it booming and flourish, such that the blacklisting of digital assets had little to no effect on its usage. This is because many have adjusted themselves to the current reality, and have adopted news ways to buy and sell crypto.

The adoption of P2P transactions

In Nigeria, financial institutions, including Deposit Money Banks (DMBs) have been ordered by the sector regulator, to stop facilitating crypto-related transactions. As a matter of fact, they’ve also been directed to freeze any account that has been used by crypto traders and digital asset holders.

Although this ban has limited the operations of traditional exchanges, which used to be one of the most common ways people in Nigeria buy and sell crypto. Since their accounts would be flagged should they indulge in such transactions, they have widely adopted peer-to-peer exchanges otherwise known as P2P to bypass the CBN’s ban.

Leveraging P2P platforms to use crypto, people in Nigeria don’t buy digital assets directly with naira anymore. Instead, they buy from another person. In this system, P2P platforms serve as marketplaces where buyers and sellers meet.

Just like the normal inter-bank transaction, on the P2P platforms, the buyer transfers the worth of crypto he or she wants to buy directly to the seller’s bank account, and the seller sends the purchased digital asset to the buyer’s wallet through the exchange.

These types of transactions don’t need financial institutions to be done. Interestingly, it is almost impossible for banks to know why the transactions were done, which makes it difficult for CBN to trace, fish out, and shut down such accounts.

About Author

Damilare Famuyiwa is a journalist and media consultant with over seven years experience. Trained at the Nigerian Institute of Journalism (NIJ), he has since been actively covering different beats, which include finance, showbiz, and music. You can reach him on [email protected]

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