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I’ve gotten plenty of inquiries today following news that the Central Bank of Nigeria (CBN) has prohibited banks from servicing cryptocurrency exchanges.
CBN also ordered banks to identify their customers who deal with cryptocurrency and block their accounts if they continue to do so.
Many of you are probably wondering what’s going on, and what’s the way forward.
I’ll try to explain it in this thread in the simplest way I can.
The CBN issued an order today (See attached image)
Banks can no longer allow cryptocurrency exchanges to hold bank accounts with them. Banks will also no longer allow customers to use their accounts to receive or send payments associated with cryptocurrency.
What is the implication?
Exchanges like Luno, Quidax, Binance, etc, will no longer allow you to deposit naira on their platform using bank transfer, your bank card, or any other source related to your bank. In other words, it is going to be somewhat difficult to buy and sell crypto in Nigeria.
Did the CBN ban crypto?
Note that the CBN did not ban cryptocurrencie
The CBN only banned banks from dealing with cryptocurrencie
Meanwhile, they say money is like water, and will always find a way to flow.
Has This Happened Before?
Yes. In 2017, the Indian central bank issued a similar order to banks in the country. It crippled the growth of crypto in India and crypto-related business had to sue the central bank for disrupting their business.
The central bank was eventually overturned by the Supreme court in 2020 after several court hearings. The court ordered the central bank to create rules to govern cryptocurrencie
This will also likely happen in Nigeria, the only question is how long? Almost nothing works here.
What’s the Way Forward?
Peer-to-peer trades will be the way forward. It was the standard in India during the ban and will likely be the same for Nigerian crypto users now.
If you know anyone that wants to or buy bitcoin, you can engage with the person directly. Be careful though with who you transact with.
You can send the money for transactions via bank transfer, without noting the reason for the transfer, while the person transfers the crypto to you. This is purely trust-based and a risk that the CBN has created.
Soon, I expect exchanges like Quidax, Luno, and co to rebrand in Nigeria as P2P exchange platforms. In the meantime, you can also use Paxful, LocalBitcoins, and Binance P2P to find people willing to buy and sell at any time.
How Long Will This Last?
At this point, no one knows for long this will last. It could take a while for the CBN to reverse the circular, or court action from affected businesses may be needed to settle the dispute.
The earlier people start adopting P2P transactions, and exchanges, the easier it would be to cope with the situation.
TLDR; Cryptocurrency is not outlawed in Nigeria. Only banks were banned from serving crypto users and businesses. You can use P2P transaction exchanges until the situation is resolved since no one knows for how long this will last.
Crypto is money. Money is like water, and will always find a way to flow.
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