Nigeria – The People Fight Back Against Central Bank Cryptocurrency Limitations

Nigeria’s central bank recently made headlines enforcing cryptocurrency restrictions on how the country’s banking sector works. Specifically, CBN reminded regulated financial institutions yesterday that a 2017 regulation prohibits them from facilitating cryptocurrency transactions or facilitating payments for exchanges. In a press release meant to showcase the rationale for the restrictions, the bank provided the following:

“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. Indeed, many banks and investors who place a high value on reputation have been turned off from cryptocurrencies because of the damaging effects of  the  widespread  use  of  cryptocurrencies  for  illegal  activities.”

Limiting the ability of investors to work through traditional Nigerian financial clearinghouses to buy, sell, or trade cryptocurrency, the bank ignored the evident popularity of cryptocurrency trading within the country and made some arguments that cryptocurrency proponents consider being erroneous. For example, CBN reportedly claimed that the nation of China has similarly banned all cryptocurrencies, which is not accurate. Then, in a bid toward the influence of Western sentiments, CBN apparently mentioned Warren Buffett and his past animosity toward crypto-assets. What the bank did not mention was that with Berkshire Hathaway contemplating blockchain-adjacent investments, Buffett’s rejection of Bitcoin and other digital decentralized assets is now mostly seen, stateside and elsewhere, as a thing of the past. 

If unpopular and constraining, the bank’s actions would be less inflammatory if not for Nigeria’s recent history of successfully protesting the emergence of the Special Anti-Robbery Squad or SARS. After much brutality and abuse by this special police department, much of it specifically revolving around controlling the financial activity of citizens on the street, activists won the day with the actual dissolution of SARS months ago as President Muhammadu Buhari pledged a commitment to reform.

In fact, according to accounts of the activity leading up to the successful abolition of SARS, those organizing around these protests began to use Bitcoin and cryptocurrencies as they found themselves locked out of traditional banking and fundraising avenues.

Now, many believe that the central bank’s actions will create a rise in peer-to-peer trading that is beyond the reach of official bank jurisdictions. Decentralized finance itself, they point out, provides the keys to getting around the actions of punitive or restrictive governments.

Around the African continent, the use of new digital currencies and fintech solutions is expanding, as a common interest in decentralized finance grows. One example is at Jelurida Africa, where a recent Africa Blockchain Developer Call Series program promoted more entrepreneurs and engineers getting involved in the cryptocurrency world. Jelurida Africa is an offshoot of a Swiss firm of the same name, which was incorporated in the Netherlands in 2016 and moved to Switzerland in 2017. Now, Jelurida Africa is engaged in prelaunch project testing and other goals ahead of additional expansion to a greater number of African nations. At the same time, Jelurida Africa  Managing Director Adedayo Adebajo is addressing the Nigerian bank’s notice by noting the conflict between fiat and crypto systems. 

“My question is, will the CBN reinstate the cryptocurrency support if the fundraising is carried out in support of the sitting government?” Adebajo said, according to reporting at Bitcoin.com. “Situations like this provide more reasons why decentralization, as offered by the blockchain technology, is highly required in Africa.”

Indeed, this dialectic is shaping up all over the world, but most nations, recognizing the ubiquity and strength of cryptocurrency markets, have begun to provide integrating regulation. Will Nigeria do the same? And if it does not, what will happen to the national economy as global decentralized finance continues to evolve?