The Central Bank of Nigeria (CBN) has reportedly banned the use of Bitcoin and other cryptocurrencies in Nigeria, three months after the country became the second largest market in the world for bitcoin transactions.
CBN directed financial companies operating in Nigeria to stop transactions relating to cryptocurrencies, citing its concern about risk associated to cryptocurrencies. CBN had stated that Naira is the only legal tender recognised for transactions in Nigeria.
In a statement sent to Deposit Money Banks (DMBs), Non-Bank Financial Institutions (NBFIs) and Other Financial Institutions (OFIs), and shared by Tech investor, Victor Asemota, CBN said trading in cryptocurrency is now prohibited within Nigeria.
The financial regulator directed the closure of all cryptocurrency accounts in operation with Nigerian banks, OFIs and NBFIs, and warmed of severe regulatory sanctions if any of the financial institutions breached it directives.
CBN’s directive comes a month after Nigeria ranked behind the United States as the largest market in the world for bitcoin, according to Coin Dance. Bitcoin is the most popular cryptocurrency, which surge in registration by 137% on crypto platform, Paxful, in 2020 in Nigeria.
Since 2017, Bitcoin transactions volume have grown by 19% yearly, with Nigeria trading 60,215 bitcoins – which was valued at $566 million – within the three years timeframe. In 2020, about 20,504.50 volume was traded, making this year the highest.
ENDSARS, a protest against police brutality, had triggered the surge in bitcoin this year, following a financial source switch by protesters after government, with the help of the CBN, blocked bank accounts of protesters – bitcoin accounted for 40% of the nearly $400,000 raised by EndSARS protesters.
Aside from Bitcoin, other cryptocurrencies include Litecoin, Ethereum, Ripple, Dogecoin, Binance Coin, among others.