Despite being one of the most inept Governments in the world, the Muhammadu Buhari-led administration continues to find a way to outdo itself. On the 5th of February, 2020, the Central bank of Nigeria sent a circular addressing financial institutions and members of the public. In the circular, it is written that Money Banks, Non-Bank Financial Institutions, and other Financial Institutions have become prohibited to deal with cryptocurrencies or facilitate payments for cryptocurrency exchanges.
Nigeria is the biggest cryptocurrency market in Africa with a monthly trade volume of $200 million per month in 2020. According to Paxful, the crypto marketplace, Nigerians are the second-largest bitcoin users by trading volume and have traded Bitcoins valued to be worth over $566 million in the last five years.
Since the announcement of this prohibition, Nigerians have taken to social media to vent their anger at the repressive policy. Many have spoken about how the country works so hard to keep Nigerians grounded. Others believe that this announcement is motivated by the Government’s inability to put a stop to donations received through Bitcoin after the CBN blocked local donation links during the #EndSARS struggle last October.
Countries like the United States of America, England and Ukraine –who is building a Bitcoin mining center– are creating mediums to embrace the nature of the cryptocurrency. However, Nigeria has refused to borrow any leaf from them.
Favour, a blockchain developer, and crypto holder told me that This circular is bad news as she would, henceforth, be unable to exchange from her bank account lest it is flagged. “This circular would mean that I may not be able to withdraw my crypto holdings from an exchange using any financial institution regulated under Nigerian laws. My holdings are practically stuck unless I find alternative means to liquidate.”
“Speaking from the perspective of a member of a team of Nigerian blockchain developers who are working on launching a crypto exchange platform, this circular has introduced a serious hiccup. It does not, however, mean that the platform cannot operate if launched. It just means that the exchange will not be able to facilitate payment to Nigerian users,” she said.
Over the years, Cryptocurrency has become a source of financial freedom for a lot of young Nigerians, helping fill the holes of unemployment and poverty. There are those who take crypto trading as a full-time occupation and some others just earn secondary pay from it. Either way, crypto provides opportunities that were originally nonexistent. This move simply means that the Nigerian Government is sabotaging its own people.
Bolaji Yahaya, a young Nigerian crypto trader told me that cryptocurrency has literally become his backbone. Discovering the trade in 2020 when he was at his lowest point. “Last year was my best year ever. I started with nothing and within four weeks, things began to become recognizably positive. This ban will cause trouble for investors. It does not look fine at all.”
Binance, the cryptocurrency giant has announced that they would be suspending deposits for now and that Nigerians can still make withdrawals although the process may be slow. For local fintech companies like Patricia and BuyCoins, it means a setback. With the hand of traditional banking removed from their system, they must find new, efficient mediums as soon as possible. Payment gateways like Flutterwave have commenced sending information to crypto exchanges, informing them that they would not be able to extend their services to them anymore.
In response to the happening, BuyCoins’ CEO, Timi Ajiboye, released a statement where he assured their partners that they are ‘indefatigable’. “We are currently working to ensure a replacement of the deposit and withdrawal flow. We are working towards something that we think will serve as a good stop-gap in the interim. There might be a bit more friction in the user experience but you’ll still be able to cleanly achieve your goal of securely buying and selling crypto. We expect to have this ready for you early next week.”
“Basically, the impact of the cryptocurrency ban will not only affect those who trade cryptocurrency but also investors. As someone who uses and holds cryptocurrency as a financial ledger to connect with the rest of the world, this is going to be multiple steps backward because now we have to look for new ways to receive money that we worked for legally,” Muhammed Akinyemi, a freelance writer and journalist, told me.
“The allegation that cryptocurrency is being used to fund criminal activities is unfounded because, despite the anonymity of cryptocurrencies, the way money moves can still be tracked. Even Russia which is a country under dictatorship will not impose such,” he said.