Regulatory Update: Nigeria's Central Bank Reverses Cryptocurrency Ban, Governor Says "Digital Currency Will Thrive domestically"

In February this year, the Central Bank of Nigeria reportedly issued a directive to ban cryptocurrency assets, requiring financial institutions under its jurisdiction to immediately close accounts associated with crypto transactions. However, in a recent reversal of stance, the Governor of the central bank assured everyone that "digital currencies will thrive in Nigeria."

February Ban Order

The Central Bank of Nigeria (CBN) issued a notice on 2/5 this year, urging regulated financial institutions in the country to immediately close bank accounts associated with cryptocurrency activities, including trading and cryptocurrency payments. The document stated:

Warnings have been issued to deposit money banks, non-bank financial institutions, other financial institutions, and entities involved in cryptocurrency trading risks to ensure the immediate closure of such bank accounts, with violators facing strict regulatory sanctions.

Impact on Numerous Exchanges

This ban led to many exchanges suspending some services, including local exchanges such as BuyCoins, Luno, and Binance. CEO Changpeng Zhao suspended user deposits at the time and urged early withdrawal of the fiat currency Nigerian Naira NGN, anticipating the rise of peer-to-peer exchanges.

However, fast forward to the present, the Governor of the Central Bank, Godwin Emefiele, has made a complete U-turn in his stance on cryptocurrency. Could it be that all stakeholders have reached an agreement?

Belief in Bitcoin Legality and Flourishing of Digital Currency

According to Business Insider, Governor Godwin Emefiele attended the 279th meeting of the Monetary Policy Committee, where he made no mention of the previous ban imposed by the Central Bank.

He expressed his belief that cryptocurrencies such as Bitcoin will be legalized in the country and stated that they have been monitoring the sector:

We have conducted research and found that many people are involved in cryptocurrencies. This is not a good situation, but don't get me wrong, some trading activities are legal, while most are illegal.

He mentioned that Nigeria ranks 27th globally in GDP, but cryptocurrency and Bitcoin trading volume ranks 2nd, hence the continued research in this area.

However, he also pointed out the most criticized aspect of Bitcoin, its high volatility, especially how its price recently experienced drastic fluctuations due to a few tweets by Elon Musk. He criticized:

We have witnessed how the market collapsed. Initially, Musk announced a $1.5 billion investment in Bitcoin, causing the price to rise, but then he tweeted about his environmental concerns, leading to a cryptocurrency crash.

Despite some concerns, he concluded on a positive note: "I can assure everyone that even in Nigeria, digital currency will flourish."