You have probably heard the news about the Central Bank of Nigeria (CBN) imposing a ban on financial services for cryptocurrency exchange operators, as well as the incongruent excuses for its action. You may have also heard of several connected controversies, like how it’s linked to the #endSARS protests, aid for which was partly funded in bitcoin.
What you probably don’t know, though, is how this is related to the economic shock from the COVID-19 pandemic, the huge arbitrage gap in the naira (NGN) prices across the Nigerian currency market, the decline in Nigeria’s inflow remittances and the emotional tension of individuals whose funds are sadly trapped in all of this.
Over the course of this piece, we will be looking at the economic state of Nigeria prior to the cryptocurrency exchange ban and how it has influenced rapid cryptocurrency adoption, the involvement of the Nigerian senate and what will most likely ensue next.
Nigeria Crypto Exchanges In Light Of The Ban
According to Statista, Nigeria was ranked as the third-highest trader of bitcoin by volume on online exchanges in 2020, which obviously speaks of huge daily-volume transfers from local banks to exchanges and vice versa. Unfortunately, the ban — which came as a sudden reminder of what the CBN has said was a prohibition instituted in 2017 — has affected countless individuals and businesses who rely on cryptocurrency, as well as exchanges with established Nigerian bank accounts.
Unlike the Indian cryptocurrency ban, which came with a week’s notice, the reminder of the Nigerian cryptocurrency restriction was circulated like a sudden knockout punch to exchange operators. Exchanges were hurt and their customers were, too. My close friends and acquaintances were all affected.
Personally, I find that it reinforced the fact that the only true financial control you can really have is the type that you get from an uncompromised private key. You may have some control with a custodial…