Why Nigeria banned cryptocurrency?
Cryptocurrency has played an enormous role in Africa, especially Nigeria in balancing its financial and economic conditions. In Africa, Nigeria is the second biggest market to hit millions of trading with bitcoin. However, due to some problems, the Central Bank of Nigeria banned all cryptocurrency trade.
On February 5, 2020, The Central Bank of Nigeria stated: “Facilitating the cryptocurrency deals and exchanges are prohibited.”
The bank also said that all persons or identities using any sort of cryptocurrency exchanges and transacting money would be observed seriously.
If any person is found guilty of exchanging cryptocurrency in Nigeria, they will face severe regulatory retribution, they added.
However, this ban changes Nigerian Cryptocurrency traders’ views who used the social media platform to express their disappointment about the “Ban.”
Cryptocurrency trading had a significant impact on Nigerians before the ban. But this ban changed the financial situation of Nigeria into its deteriorated form. Nigerians considered this ban to be inconsiderate to the financial need of youth.
However, the CBN stated that this ban is not a new regulatory move. The cryptocurrency tradings were already banned since 2017. The Central Bank Of Nigeria struggled to clarify its action, but there was no positive response from the youth.
Nigeria was the most famous African country to use cryptocurrency for online money exchange. Using cryptocurrency, they managed Nigeria’s financial situation exceptionally; using different cryptocurrency trading apps and platforms played an essential role in this regard. One of the excellent cryptocurrency trading platforms is BitQt, which offers secure trading policies and budgets.
Reasons for banning cryptocurrency in Nigeria
The Central Bank Of Nigeria altogether banned cryptocurrency after its colossal contribution to the financial crisis of Nigeria. Here are the few reasons which provoked the CBN to take this step.
- Direct Contravention of existing law
On Jan 12th 2017, the government of Nigeria and the Central Bank of Nigeria forbade the use of cryptocurrency and cryptocurrency facilitating exchanges. However, cryptocurrency such as bitcoin later hit $566 million in Nigeria alone.
This move was a drastic one for the Nigerians as the cryptocurrency such as bitcoin and Ethereum were trading as the number one and provided Nigeria with enormous benefits and advantages.
However, until the second ban, this did not prevent Nigerians from using cryptocurrency to facilitate deals and transactions. People of Nigeria kept utilizing cryptocurrency, which was the direct breakage and unfollowing of the existing law.
- Online scams and fraudulent activities
Cryptocurrency played a crucial role in managing and balancing the financial crisis in Nigeria; it also gave rise to severe fraudulent activities and online scams. More and more cryptocurrency traders fell prey to these frauds.
There were a lot of illegal transactions. The problem arose when anonymous persons did all the illicit transactions. It was getting harder to recognize the unknown identities to eradicate the online scams from the cryptocurrency environment.
The increasing ratio of online scams in cryptocurrency was one of the biggest reasons to ban cryptocurrency in Nigeria.
- Money laundering and terrorism finance
With the advancement in the world, people living in it also become more advanced. This advancement is also a potential threat to other countries sometimes. Many people used advanced techniques and tricks to launder money from cryptocurrency in an illicit way.
This illegal money laundering gave rise to terrorism finance. Money laundering enabled the terrorist communities to purchase weapons illegally.
Conclusion:
Nigeria was one of the biggest countries to possess cryptocurrency, hitting millions in crypto trade. However, this money exchange brought scams and frauds that forced Nigeria’s government to ban cryptocurrency in Nigeria. This action was necessary to manage the financial losses due to scams.
