Less than two weeks ago, the Central Bank of Nigeria (CBN) ordered a crypto ban. They banned all regulated financial institutions from providing support to crypto exchanges in the country. With threat of sanctions, banks and other financial institutions were asked to freeze accounts of individuals and firms that traded crypto.
Despite the controversial crypto ban by the CBN, public interest in Bitcoin in Nigeria continues to grow even ahead of other countries according to Google Trends data. Similarly, there is a 36 percent premium on Bitcoin’s price.
It means a $71,150 price tag per Bitcoin, as compared with the average spot market price of $51,314 calculated. The premium price Bitcoin is sold for in Nigeria is way higher than the largest premiums globally at present. 3.24 percent in South Africa, and between 1 percent and 3 percent in Argentina, Peru, Malaysia, and Vietnam.
Reportedly, the immediate impact of the central bank ban appears to have done little impact on crypto-economics in the country.
Why Nigeria ban Bitcoin
The Central Bank of Nigeria (CBN) while explaining why it placed a ban on cryptocurrencies claimed that the digital currency is used for money laundering and terrorism. The regulator also affirmed to a 2017 directive to financial institutions to block cryptocurrency accounts.
“The use of cryptocurrencies in Nigeria are a direct contravention of existing law,” the statement said. “It is also important to highlight that there is a critical difference between a Central Bank issued Digital Currency and cryptocurrencies. As the names imply, while Central Banks can issue Digital Currencies, cryptocurrencies are issued by unknown and unregulated entities,” a statement released by the CBN said.
“The question that one may need to ask therefore is, why any entity would disguise its transactions if they were legal,” it added.
“It is on the basis of this opacity that cryptocurrencies have become well-suited for conducting many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.
The role of cryptocurrencies in the purchase of hard and illegal drugs on the darknet website called “Silk Road” is well known. They have also been recent reports that cryptocurrencies have been used to finance terror plots, further damaging its image as a legitimate means of exchange.
See the full press release of why CBN ban cryptocurrencies here.
Outrage after crypto ban
The most populous African country no doubt would be missing out on a lot of prospects Bitcoin can add to its economy and financial space. Blockchain.com published a report back in Aug. 2020 revealing that Nigeria had been the best-performing country on its platform since April of that year. Google Trends at the time likewise reflected the country’s persistent top ranking in terms of global search interest in Bitcoin.
The ban led to outrage among Nigerian youths most of whom have adopted the digital asset. They took to social media to react and air their anger over the ban.
— JJ. Omojuwa (@Omojuwa) February 5, 2021
How can you ban crypto transactions in 2021 !! A currency that’s growing our economy little by little.People are making money legitimately.Doubling their money and taking care of their families with it!They just want us to suffer! Our government hates progress!! It’s saddening💔
— Oyindamola🙄 (@dammiedammie35) February 5, 2021
Buhari loves cattle currency, not crypto currency.
— Kelvin Odanz (Or Odense) (@MrOdanz) February 5, 2021
The CBN felt threatened cos they are losing people to Crypto. People are transferring the money in their bank account to where it will be beneficial for them but the government hate to see it. Truth is they can’t control what they don’t understand. Bitcoin is going no where.
— Valar Morghulis ♮ (@tommy_viccetti) February 5, 2021
Federal Government banning Crypto is another proof this country is designed to make people poor.
— DREYLO (@RealDreylo) February 5, 2021
Crypto in Nigeria after CBN ban
Following the crypto ban by the CBN, Nigerians in their resilience have resolved to opt to peer-to-peer crypto exchange to get on with their crypto transactions. According to Usefultulips (a Bitcoin analytic data provider) revealed that the use of Bitcoin for peer-to-peer lending in Nigeria surged by 15.8% since the CBN directive took effect about six days after the ban.
Nigeria led the pack with about $7.35 million in P2P trading on LocalBitcoins and Paxful, while the closest rival, Kenya, had a transactional value of just $2.86 million after the ban. South Africa came in third with a transactional value of $2.38 million.