Nigeria’s journey with cryptocurrencies has been characterized by a mixture of enthusiasm and opposition. While the citizens have shown great interest and acceptance towards digital assets, the government has maintained a strong stance against them.
This has led to the implementation of a ban on cryptocurrencies within the country, effectively prohibiting individuals from conducting crypto transactions through their bank accounts.
Recently, the central bank has provided an explanation for this decision, shedding light on the motivations behind their actions.
Crypto Poses Risks to Financial Stability
In a recent local news report, the Central Bank of Nigeria shed light on its decision to prohibit Nigerians from conducting cryptocurrency transactions through their commercial bank accounts. The central bank expressed concerns over the inflationary risks associated with digital assets, deeming them a potential threat to the country’s financial stability.
Central Bank of Nigeria Cites Anonymity and Inflation Concerns as Reasons for Crypto Ban
During a retreat in Abuja, Kinsley Obiora, the Deputy Governor of Economic Policy at the Central Bank of Nigeria, provided insights into the rationale behind the ban on cryptocurrency transactions. Speaking at the Business Session of the Fiscal Liquidity Assessment Committee (FLAC), Obiora highlighted concerns about the anonymity associated with digital currencies.
He explained that as the popularity of cryptocurrencies surged, there was growing apprehension that unchecked authority over the money supply by central banks could lead to inflation and diminish the purchasing power of households. These factors contributed to the decision to implement the ban and restrict crypto-related activities in Nigeria.
Nigeria Emerges as a Leading Crypto User Despite Central Bank Ban
In spite of the ban imposed by the Central Bank of Nigeria on cryptocurrencies, the country continues to witness rapid adoption of digital assets. A recent survey conducted by Statista revealed that nearly half of Nigeria’s population (47%), predominantly composed of young individuals, actively engage in cryptocurrency usage.
Remarkably, this translates to approximately one in every three Nigerians currently utilizing digital currencies. While Nigeria took an innovative step by introducing its own Central Bank Digital Currency (CBDC) called the eNaira, its adoption has been relatively sluggish compared to popular cryptocurrencies such as Bitcoin, Ethereum, and USDT. Nigerian citizens demonstrate a strong preference for these established digital assets when conducting their crypto transactions.
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The landscape of cryptocurrency adoption in Nigeria is witnessing a notable shift, propelled by the proposed Amendment to the Investments and Securities Act 2007 bill in December 2022.
The bill aims to acknowledge and legitimize the use of Bitcoin and other cryptocurrencies within the country. Highlighting the importance of embracing global practices, Babangida Ibrahim, Chairman of the House of Representatives Committee on Capital Markets, emphasized the need for an efficient and dynamic capital market in Nigeria.
The proposed amendment signifies a step toward aligning with contemporary trends and fostering a vibrant cryptocurrency ecosystem in the country.
Important: This article is intended solely for informational purposes. It should not be considered or relied upon as legal, tax, investment, financial, or any other form of advice.
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