Tag: Central Bank Of Nigeria

The Central Bank of Nigeria to Conduct its Central Bank Digital Currency Pilot on October 1

by Blockchain News

The Central Bank of Nigeria (CBN) officially announced that it will officially pilot its central bank digital currency (CBDC) on the Hyperledger Fabric blockchain on October 1.

Rakiya Mohammed, Director of Information Technology at the Bank of Nigeria, stated in a webinar that it is possible to conduct a corresponding proof of concept (POC) by the end of this year at the latest.

According to reports, this project “GIANT” will operate on the Hyperledger Fabric blockchain, dedicated to providing private companies with blockchain-based products, solutions, and applications.

The Central Bank of Nigeria stated that about 80% of central banks worldwide are issuing CBDC or have already issued their CBDCs, including Thailand, China, the United States, South Korea, Ghana, Philippines, etc.

Nigeria’s Central Bank also stated that Nigeria also needs to join the CBDC track to facilitate the macro-control of the country and the facilitation of cross-border trade.

As early as before, Nigeria has always maintained a hostile attitude towards cryptocurrencies. As reported by Blockchain.News on February 8 this year, the Central Bank of Nigeria (CBN) has doubled down its efforts to cripple cryptocurrency transactions in the country, stating they are a breeding ground for illegal activities.

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Nigeria’s SEC Puts Plans to Regulate Crypto on Hold in Light of Central Bank Ban

by Coindesk

Nigeria’s Securities and Exchange Commission (SEC) announced Thursday it has put plans to regulate cryptocurrencies on hold in light of the central bank’s decision to ban them, according to a report by the Guardian Nigeria.

The regulatory body released a statement officially confirming any plans to regulate the cryptocurrencies are now on hold following a Central Bank of Nigeria (CBN) directive ordering banks to close any accounts transacting with cryptocurrencies. 

“For the purpose of admittance into the SEC regulatory incubation framework, the assessment of all persons and products affected by the CBN circular of Feb. 5, 2021, is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking system,” the SEC said in a statement seen by the publication.

The CBN letter which was signed by Bello Hassan, Director of Banking Supervision, said it was reminding regulated banking institutions that “dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited” and any breaches of the order would face “severe regulatory sanctions.”

Despite the announcement made by CBN, the Nigerian cryptocurrency community seemed largely undeterred using peer-to-peer exchange platforms to continue trading.

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Nigeria’s Senate Summons Central Bank Chief to Explain Crypto Ban

by Coindesk

Nigeria’s Senate has summoned the country’s top financial regulators for a briefing after the central bank ordered local financial institutions to stop providing services to crypto companies and users last Friday.

The Nigerian Tribune reported Thursday the Senate has mandated its banking committee to invite the governor of the central bank (CBN), Godwin Emefiele, and the director general of the Nigerian Securities and Exchange Commission, Lamido Yuguda, to appear at a time to be determined and explain the opportunities and threats of cryptocurrency. The Senate session discussing the issue was live-tweeted on the Senate’s official Twitter page. 

Last week’s CBN directive caused an uproar on social media, while local crypto advocates wrote to the bank asking for clarification on the order. In response, the CBN published a five-page statement that included a pledge to protect Nigerian citizens from the risks of cryptocurrencies. 

“[The CBN] will continue to do all within its regulatory powers to educate Nigerians to desist from its use and protect our financial system from activities of fraudsters and speculators,” the statement said.

But a number of senators opposed the CBN move and an outright ban on crypto, though they spoke in favor of regulating the industry. 

“The next level is cryptocurrency and we can’t run away from it. It is CBN’s responsibility to bring Nigerians to the next level, not discouraging it. It is the simplest way of exchange,” Sen. Bassey Akpan said. 

Despite its risks and dangers, crypto has its merits, Sen. Dung Gyang said, adding that the lawmakers want the CBN governor to brief them on the risks and opportunities that crypto offers the nation so that Nigeria won’t “miss out.”

Another senator, Solomon Adeola, said he is “strongly against” the CBN’s outright ban on crypto and that the bank should instead be regulating the space.

According to the Nigerian Tribune report, the Senate will be taking an informed position on the issue after the briefing. 

Sen. Adetokumbo Abiru, who co-sponsored the motion, said cryptocurrency is a major transaction tool and an employer of “teeming youths” in the country. 

“So I am not sure the CBN can ban it,” Sen. Abiru said. 

Nigerian crypto users seemed largely undeterred after the CBN directive took effect, turning to peer-to-peer exchange platforms to continue trading. Nigerian peer-to-peer trading soared past two of Africa’s largest crypto markets, Kenya and South Africa, since the announcement.  

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Bitcoin ‘Can’t Be Stopped’: Nigerians Look to P2P Exchanges After Crypto Ban

by Coindesk

“There’s no stopping crypto, [it’s] the future and we won’t let some old fools take our future from us,” one Nigerian bitcoin user who wished to remain anonymous told CoinDesk. “We’re Nigerians. Using the crypto is a way out of poverty for the youth.” 

Last week, the Central Bank of Nigeria (CBN) ordered banks to close down accounts associated with cryptocurrencies. But this will not be enough to shut down Nigeria’s cryptocurrency market.

CBN clarified on Sunday that this is not a new order, but a reminder of a directive published in 2017. However, whether old or new, it’s having an impact. In response, banks quickly cut ties with cryptocurrency companies, such as the Binance exchange and social payments app Bundle, which in turn stopped accepting deposits.


Nigeria has become a hot spot for cryptocurrency as an alternative to the naira, a national currency prone to depreciation. Nigerians have found various use cases for decentralized digital currencies, from trading bitcoin to make a living to using it to dodge trade restrictions with China. During protests against police corruption in the country last October the Feminist Coalition was one activist non-profit accepting donations going toward the protests. When the group’s bank accounts were frozen and it couldn’t accept funds, it switched to bitcoin donations because the payment method could not be frozen. 

Some Nigerian cryptocurrency users aren’t happy about the directive and have said they plan to continue using cryptocurrencies by using methods that are harder to detect and stop.

Moving to ‘peer-to-peer’

Some users think they can get around them by not using centralized exchanges. 


“Bitcoin is peer-to-peer, meaning that it can be transacted without intermediaries. Your bank may be able to shut down your account but no one can shut down your bitcoin wallet. This development, while concerning, will not be the end of bitcoin in Nigeria,” said Nigerian Bitcoin Core contributor Tim Akinbo on Twitter.

Exchanges such as Binance have been affected because payment partners that store the naira are no longer willing to deal with them due to the directive, putting an indefinite pause on naira deposits to exchanges. 

But there’s an alternative: peer-to-peer transactions, where two users connect directly to each other to trade cryptocurrency. In return for bitcoin or other cryptocurrencies, a user might make a bank transfer directly to the other user, or pay that person with cash. Platforms such as Paxful and a Binance’s peer-to-peer platform help connect users to other users so they can coordinate these transactions. 

“As we all know, [peer-to-peer] can’t be stopped,” one trader in Nigeria, Lucky, told CoinDesk.

Despite CBN’s directive, several sources in Nigeria told CoinDesk they plan to continue trading bitcoin via peer-to-peer exchanges, and more aired similar conclusions on social media. 

“Most people will return to [peer-to-peer] transactions, some will leverage several alternatives that connect crypto to legacy financial systems, like reloadable Visa or Mastercard. Most will simply use crypto as a choice reserve asset. […] A lot of activities will also go clandestine, or underground,” said developer and cryptocurrency educator Chimezie Chuta.

He added he plans to use “alternative channels” to remain a part of the cryptocurrency community.


Crypto exchange Bundle made a similar comment in a statement to its customers about moving to “alternative channels” to ensure they can still buy and sell cryptocurrency. The email stated the exchange will provide more information about how this will work in the coming days. 

CBN did not respond to an inquiry from CoinDesk by press time about whether these alternatives are lawful. 


A mistake?

The CBN order for banks to close accounts associated with cryptocurrency is supposed to curb criminal activity and risky investments. In its clarification, it also listed several reasons why it considers cryptocurrencies dangerous and noted that other central banks and international financial institutions have warned against their use. 

“They have all made similar pronouncements based of the significant risks that transacting in cryptocurrencies portend – risk of loss of investments, money laundering, terrorism financing, illicit fund flows and criminal activities,” the letter reads.

Sources in Nigeria disagree, arguing the regulations are a mistake.

“The fact that the CBN sent out this controversial memo to banks and other financial institutions without giving the industry participants and stakeholders an opportunity of dialogue shows how little they know about the Nigeria blockchain and cryptocurrency ecosystem,” Chuta said. 

He argued that Nigerians should have a choice over what assets they invest in, especially because the value of the naira depreciates over time and users might want to use bitcoin as a hedge against this continuous inflation. He said many Nigerians are using crypto trading to put themselves through school, thousands of new businesses and jobs are being created by crypto innovation.


“The fact is that this directive was ill-advised, archaic, retrogressive, insensitive, and [smacks] of primitive superstition,” he added.

Some users are waiting to see if CBN issues any more rules or clarifications.

“Decentralized systems are hard to ban. But as for me, I’m waiting for more directives and then I can pick my positions,” crypto enthusiast Bayo Adebayo told CoinDesk, adding: “But putting a ban in the first place is very bad. I don’t like Nigeria. If it is to be banned totally, I will find a way to leave this Nigeria.”



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State of Crypto: India and Nigeria’s Crypto Crackdowns Continue Old Trends

by Coindesk

Welcome to State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. I’m your host, Nikhilesh De.

Are governments worrying more about the growth of crypto? Two countries already announced crypto-related bans, though this could be an extension of previous efforts at controlling the space – and their own economies – rather than new initiatives

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The crackdown begins (again)

The narrative

In recent weeks, both India and Nigeria have made noises about banning crypto industry participants’ access to the traditional banking sector. This could be a sign of renewed government crackdowns on the space. 

Why it matters 

Bitcoin and subsequent cryptocurrencies were designed to be censorship-resistant, stateless and a tool of economic freedom. Citizens in Belarus and Nigeria used bitcoin to raise funds for those who lost their jobs or otherwise faced repercussions for protesting against authoritarian regimes. People in other countries use cryptocurrencies as a way of cheaply transferring value across borders. 

But the crypto space might not yet be mature enough to actually fulfill those goals – at least, not entirely. Ray Dalio, head of major hedge fund Bridgewater Associates, said government prohibition could have a significant negative impact on cryptocurrency adoption, and we’re indeed seeing governments try to enact or enforce stringent regulation. 


Breaking it down

The Indian government began considering a bill that would ban private cryptocurrencies late last month, defining “private” as any cryptocurrency that’s not state-backed. The bill, which was introduced to the Lok Sabha, the lower house of the Indian parliament, also suggested that India could launch its own central bank digital currency (CBDC), issued by the Reserve Bank of India (RBI), the nation’s central bank. 

There are two details here that stick out to me, The first is that the RBI tried to restrict cryptocurrencies once before, when it told banks they could not provide services to crypto companies in 2018. That ban was later struck down by the nation’s Supreme Court, though RBI vowed to fight the ruling. This new bill, which was also introduced in the Rajya Sabha (the upper house), could be a natural evolution of that policy goal, one that would have the force of law behind it.

The second detail is the Indian government has also tried to control its financial system before. In 2016, the government demonetized the ₹500 and ₹1,000 notes, some 86% of the circulating currency, nominally in an effort to stamp out “black money,” or cash held from illicit means. In 2018, India’s Aadhaar system decided every resident effectively needed access to the biometric identification platform in order to buy a cell phone or access banking services. 

A continent away, the Central Bank of Nigeria (CBN) published a document saying banks cannot provide crypto exchanges with services. Binance and Bundle Africa immediately announced they would suspend deposits. 

Here, too, the CBN says its ban isn’t new, but rather that its statement last week is merely reiterating a position it has held since 2017. Still, the timing of the move is interesting, coming just months after residents began using bitcoin to raise funds as part of the #ENDSARs movement. 

Basically, this looks like a trend. Crypto is getting to a place where governments have to pay attention to it. Some industry insiders seem less alarmed about Nigeria’s ban than their Indian counterparts are about the subcontinent’s ban. 

U.S. Congress

Meanwhile, Congress is gearing up to face a number of issues this year, beginning with an impeachment trial that starts this week and coronavirus pandemic relief. However, a number of cryptocurrency issues will likely work their way through Capitol Hill. Here are a few of the major players to watch:

House of Representatives

  • Representative Maxine Waters (D-Calif.) – Rep. Waters chairs the House Financial Services Committee, the main committee that oversees cryptocurrency and fintech issues in the House of Representatives. She has called a hearing next week on Robinhood and the GameStop pump.

  • Representative Patrick McHenry (R-N.C.) – Rep. McHenry is the ranking member on House Financial Services. McHenry has said publicly that he’s a proponent of cryptocurrencies and fintech innovation.

  • Representative Jim Himes (D-Conn.) – Rep. Himes is the chair of the HFSC Subcommittee on National Security, International Development and Monetary Policy, which is holding a hearing on domestic terrorism funding in the wake of the Jan. 6 Capitol Hill insurrection later this month. Expect bitcoin to come up.

  • Representative French Hill (R-Ark.) – Rep. Hill is the ranking member on the National Security subcommittee.

Senate

  • Senator Sherrod Brown (D-Ohio) – Sen. Brown is the new chair of the Senate Committee on Banking, Housing and Urban Development. In public statements he has said his focus will be on evaluating a real-time payments system, as well as paying more attention to housing and urban development issues than the committee has in years past.

  • Senator Patrick Toomey (R-Pa.) – Sen. Toomey is the ranking member of the Senate Banking committee.

  • Senator Elizabeth Warren (D-Mass.) – Sen. Warren, who drove the creation of the Consumer Financial Protection Bureau, is on the Senate Banking and Finance committees. She hasn’t explicitly said anything about cryptocurrencies recently but has been outspoken on consumer protection issues that could intersect with the crypto industry.

  • Senator Cynthia Lummis (R-Wyo.) – Sen. Lummis, who won her seat in last year’s election, is joining the Senate Banking committee as its first member who’s an active bitcoin advocate. She has already announced her intention to launch a fintech caucus in the Senate and said she hopes to “work with federal regulators to ensure that regulation of digital assets are structured to encourage innovation, instead of stifling it.”

Biden’s rule

Last week, President Joe Biden formally withdrew the nominations of Robert Benedict Bowes and Brian Brooks. Bowes was former President Donald Trump’s nominee to be a Commodity Futures Trading Commission commissioner to succeed current Commissioner Brian Quintenz. Brooks, the former Acting Comptroller of the Currency, was nominated to a full five-year term. Biden is expected to name Chris Brummer and Michael Barr to fill the CFTC and OCC roles.

Changing of the guard

Key: (nom.) = nominee, (rum.) = rumored, (act.) = acting, (inc.) = incumbent (no replacement anticipated)


Elsewhere: 

  • US Senate Bill Re-Introduces Suspicious Activity Reports for Social Media: There’s a new bipartisan bill introduced in the U.S. Senate that would basically create a sort-of FinCEN for social media platforms. Anyone can file a “Suspicious Transmission Activity Report,” or STAR, to report allegedly illegal activity on different technology platforms to this new agency. What could possibly go wrong?

  • Ethereum Futures Are Now Trading on CME: Cash-settled ether futures are live on the CME, one of the first U.S. exchanges to launch bitcoin futures back in 2017. Tim McCourt, CME’s global head of equity products, told my colleagues on CoinDesk TV that, “we’ve had record adoption of institutional players” since those first bitcoin futures contracts began trading. 

  • Protego Becomes Second Crypto Firm to Win Bank Charter From OCC: A Seattle-based digital asset firm Protego Trust has won a conditional bank charter, joining Anchorage in being one of the first crypto firms approved to operate as a national bank. This is an interesting move to me because former Acting Comptroller Brian Brooks is no longer at the regulatory agency, meaning critics of the OCC’s moves on crypto can’t say he influenced this particular decision. It’s a promising sign. Also, Metal Pay has filed for a charter with law firm Anderson Kill’s assistance.

  • Ron Hammond, a former legislative staffer for Rep. Warren Davidson (R-Ohio) who wrote the Token Taxonomy Act before joining Ripple as a government liaison, has joined the Blockchain Association as Director of Government Relations. 

Outside crypto:

  • Getting vaccinated is hard. It’s even harder without the internet.: This MIT Technology Review article looks at the difficulties Americans living in San Francisco – the heart of the nation’s tech scene – face trying to get internet access. It’s not just a matter of physical infrastructure either. Reporter Eileen Guo notes that even where the internet is easily accessible, people might not be able to afford telecom provider costs.



If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at nik@coindesk.com or find me on Twitter @nikhileshde. 

You can also join the group conversation on Telegram. 


See ya’ll next week!



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Nigerian Central Bank Says Its Ban on Crypto Accounts Is Nothing New

by Coindesk

The Central Bank of Nigeria (CBN) issued a five-page statement Sunday clarifying its position on cryptocurrencies after a regulatory warning to local banking institutions on Friday sent shockwaves through social media. 

In Sunday’s statement, the CBN said Friday’s letter was only a reminder that cryptocurrencies were not legal tender in Nigeria, and was reiterating a position the bank has held since 2017, not imposing new restrictions on the industry. 

“It is important to clarify that the CBN circular of February 5, 2021 did not place any new restrictions on cryptocurrencies, given that all banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies,” the statement said. 

The CBN sent a letter to local financial institutions on Friday, ordering them to shut down all bank accounts associated with cryptocurrency trading platforms. In response to the letter, crypto trading platform Binance and local electronic payment apps like Bundle halted deposits. Angered Nigerian crypto users took to Twitter and other social media platforms to express their displeasure.  

The press statement, signed by Osita Nwanisobi, Ag. director of Corporate Communications, goes on to list other countries that have banned its banks from dealing in cryptocurrencies and makes the claim that in China, “cryptocurrencies are completely banned and all exchanges closed as well.” 

It also states that cryptocurrencies are issued by “unregulated and unlicensed” entities, and that crypto assets are volatile speculative assets that can be a danger to Nigerian users. 

“The very name and nature of ‘cryptocurrencies’ suggests that its patrons and users value anonymity, obscurity, and concealment,” the statement said. 

In the letter, the CBN assured that this stance will not inhibit the progress of the fintech sector in the country, or its payments ecosystems. The directive became necessary, it said, to protect Nigerians, including its youths from the risks inherent in crypto assets transactions.

“Due to the fact that cryptocurrencies are largely speculative, anonymous and untraceable they are increasingly being used for money laundering, terrorism financing and other criminal activities,” the statement said. 

The letter also stated that the high volatility inherent in crypto assets posed a great threat to “small retail and unsophisticated investors” who stand to lose a lot.

“In light of these realities and analyses, the CBN has no comfort in cryptocurrencies at this time. It will continue to do all within its regulatory powers to educate Nigerians to desist from its use and protect our financial system from activities of fraudsters and speculators,” the statement said.

Read CBN’s full statement below:

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Binance Suspends Deposits in Nigeria Following Central Bank Directive

by Coindesk

Binance has temporarily suspended deposits in Nigerian naira – the country’s local fiat currency – in response to a Friday letter from Nigeria’s central bank (CBN) instructing local banks to identify and close all accounts tied to cryptocurrency platforms or operations.

The CBN letter told local banking institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited under a 2017 circular stating bitcoin (BTC) and other cryptocurrencies are not legal tender in the country. While the move might impact fiat on- and off-ramps, most of the nation’s crypto trading occurs on peer-to-peer platforms and remains unaffected, according to sources in Nigeria.

In a statement, Binance announced its Nigerian naira payment partners suspended deposit services until further notice, starting from 7 p.m. local time (GMT+1) as of Friday, adding that it is monitoring the situation closely. 

“Withdrawal services remain normal and will continue to be processed but might take slightly longer time than usual,” the statement said. 

The CBN directive comes just months after protesters in Nigeria used bitcoin to raise funds after authorities reportedly shuttered bank accounts associated with the movement. 

Since the letter started making rounds on the internet, Nigerian crypto users tweeted the hashtag #WeWantOurCryptoBack over 26,000 times, according to data obtained from SproutSocial. 

But professionals in the crypto space do not believe the panic will last, or it will have any impact on crypto adoption. 

Nigeria-based software and blockchain engineer Tosin Olugbenga told CoinDesk the CBN may have issued the directive because of  the bitcoin price run of 2020 and growing interest in cryptocurrencies worldwide is causing Nigerians to convert their earnings to crypto. 

“They’re moving money from naira to crypto. That is what the CBN sees and has taken issue with. It is not banning crypto trading. It’s just telling financial institutions not to allow their platforms to be used to buy or sell crypto on exchanges like binance,” Olugbenga said. 

Olugbenga added that most crypto transactions in Nigeria happen on peer-to-peer exchanges, so once the panic dies down trading will continue as usual. 

“The news has caused a panic in the crypto space, especially for new crypto investors, but the true essence of crypto is decentralization. [The] majority of crypto trades that occur in Nigeria are peer-to-peer,” Aronu Ugochukwu, chief executive officer of DeFi platform Xend Finance, told CoinDesk via an email. 

So far, the CBN has not provided an official reason for the sudden order that is sending panic through social media. 

Nigeria is the latest government to take an interest in regulating the space: India is once again considering a ban on private cryptocurrencies. Meanwhile, the president of the European Central Bank, Christine Lagarde, said bitcoin facilitates questionable transactions and should be regulated on a global scale.  

Read the CBN letter below:

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Bitcoin (BTC) $ 27,017.24 0.24%
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