Four Reasons Why CBN Banned Cryptocurrency Exposed
Following the recent banned of cryptocurrency by federal government of nigeria.
Cryptocurrency is a virtual or digital currency that appreciates or depreciates based on market forces. It has lately become popular among young Nigerians who invest and make profit out of it. Few days ago, the Central Bank of Nigeria (CBN) directed Deposit Money Banks (DMBs) and other financial institutions to close accounts of persons who are using their systems for cryptocurrency trading. Meanwhile, it is not the first time the CBN would be showing its contempt for cryptocurrency.
In 2018, the apex bank issued a circular to say cryptocurrencies are not legal tenders in Nigeria. However, the recent restrictions by the CBN has drawn widespread rage and condemnation from many Nigerians especially youths who have invested into it.
Here Are Possible Reasons Why The Government Placed Restrictions On Crypto Transactions With Banks:
1. REGULATION: Most Cryptos are peer-to-peer (P2P) enabled with platforms that brings traders together from different parts of the world to buy and sell directly with each other, without intermediaries. This means the CBN and other state owned financial institutions may not be able to REGULATE the system and thereby gain control over it.
2. CRIME: The CBN had expressed worry that terrorists, kidnappers and other criminals may take advantage of digital currencies in enhancing their nefarious operations while dealing with innocent citizens.
3. GAMBLE: The CBN in 2018 likened the trading of cryptos to gambling. It said it could not give support to situations “where people risk their savings to gamble.” This they allude to the fact that people do not consider or talk about the risks involved in trading digital currencies.
4. #ENDSARS: Many youths on social media see the recent restrictions on crypto transactions as a vendetta by the government to stifle one of the systems that helped finance their protest against police brutality (#EndSARS) late last year. Finally, a lot of young Nigerians affected by the recent directive of the CBN believe that the government needs to re-evaluate its decision as soon as possible. They insist that policy makers need to be better informed on the massive economic impact of crypto trading. As it has helped many defeat the unemployment struggle and improved lives.