Since cryptocurrency found its way into Nigeria, it thrived and gradually took over some functions of regular money but it seems the Central Bank has never liked cryptocurrencies because in 2018, a circular was issued saying cryptocurrencies are not legal tenders in Nigeria. Specifically the circular said, ‘For the avoidance of doubt, dealers and investors in any kind of cryptocurrency in Nigeria are not protected by law. Virtual currencies are traded in exchange platforms that are unregulated, all over the world’.
The use of cryptocurrency in Nigeria grew astronomically in 2020 during the #EndSars protests after bank accounts of supporters were frozen. The use of Bitcoin (and other coins) which is by far the most popular of them all continued to increase after the #EndSars protests came to an end and Nigeria still remains at the top in terms of search interest for Bitcoin, according to Google trends.
On Friday, February 5th 2020, the Central Bank of Nigeria in a circular placed a ban on financial institutions that regulate cryptocurrency. They are to stop rendering services to crypto exchanges in the country. The Central Bank ruled this as an extension of its previous warning to banks concerning the risk associated with cryptocurrencies.
The Central Bank of Nigeria has asked all commercial banks to close all accounts belonging to businesses transacting in cryptocurrencies and crypto exchangers. The CBN also promised dire penalties to financial institutions that refuse to comply with the directive.
In September 2020, the Nigerian Securities and Exchange Commission recognized cryptocurrencies such as Bitcoin, Ethereum, Litecoin, etc., as securities. They also has plans to establish cryptocurrencies with a legal framework and this leaves many people wondering why a sudden ban without enough or any visible warning.
Cryptocurrencies was one of the best ways to invest and make money in a country such as Nigeria and with this ban, many (especially the youths) feel like food have been taken out of their mouth. The statement issuing the ban on cryptocurrencoes was signed by the Director of Banking Supervision; Bello Hassan and the Director of Payments Systems Management Department; Musa I. Jomoh. The reason for the ban was not said but social media is raving with the displeasure felt by Nigerians over the ban. The hashtag #WeWantOurCryptoBack has started to trend after the ban was issued yesterday.