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Mixed reactions have continued to trail the directive of the Central Bank of Nigeria, prohibiting trading and dealing in digital currency, as investors and operators in the digital currency market have threatened to sue the apex bank if it does not desist from its campaign against investing in the virtual currency market.
This is just as financial analysts and experts expressed support for the apex bank in its resolve to prohibit Nigerians’ participation in the new investment avenue in the country.
The investors’ and operators’ threat came against the backdrop of several warnings issued by the apex bank to all commercial banks to avoid any transaction in virtual currencies, threatening to sanction erring institutions.
Earlier, the CBN had banned banks from transactions in virtual currencies. The Director, CBN’s Financial Policy and Regulation, Mr. Kelvin Amugo, explained that the ban was necessitated by money laundering and terrorism financing risks inherent in operations of virtual currencies.
Some of the currencies are bitcoin, litecoin, ripple, dogecoin, onecoin, monero and peercoin, among others. “Transactions in VCs are largely untraceable and anonymous, making them susceptible to abuse by criminals, especially in money laundering and financing of terrorism.
VCs are traded in exchange platforms that are unregulated, all over the world. Consumers may, therefore, lose their money without any legal redress in the event these exchanges collapse or close business,” he warned.
Patrons and traders of the VCs, however, said that transactions in the digital currencies had become a global trend being embraced by both developed and developing nations.
They expressed the view that contrary to the fear of the CBN that the platform was not regulated, it had immense intrinsic value as a selfregulating, frictionless payment network affordable to almost anyone.
One of the patrons and a former insurance broker, Mr. Abayomi Ashekun, said it appeared that the apex bank was confused because VCs were not like Ponzi schemes, which are illegal.
He added that banning investments in the platform was like frustrating Nigerians, who were already suffering from the pains of the current recession.
According to him, the CBN and the Securities and Exchange Commission are only crying more than the bereaved or pretending to be more active than their foreign counterparts.
He said, “The technology allows someone to send any amount of money to anyone else in the world, at virtually no cost with nothing more than an Internet connection or smart phone. The currencies are free from all Central Banks’ control because it has been decentralised.
It has proven that it can serve as a store of value for people who lose trust in their national currency like the naira, which has lost its value due to the negligence on the part of the apex bank itself.
“Digital currencies are profitable investments for the Nigerian masses, as they yield return on investment of between one and five per cent on a daily basis.
For instance, 1 TBC is valued at N481, 000. So you buy the coins and leave them for a while to grow in value. When it appreciates, you can trade or sell it. By that time, the value on it would have grown.”
Government is killing us with heavy import duties, with the poor value of naira and now that we have found an investment platform to ease the burden of recession on our business, the same government is asking us not use it
The Managing Director, Prince O Motors, Prince Olu Adewunmi, explained that the innovation had been a blessing to his business, especially since the crash of the naira against the dollar. He told The Point that as an importer of vehicles, he did not need to change naira to dollar to import vehicles into the country.
According to him, all he needs to do is to sell or trade the equivalent value of bitcoin for the vehicle. He said, “At that level, the fluctuation of naira or dollar does not affect my business any longer. The only thing I do here is to clear my goods at the Nigerian port and that makes it cheaper for me, compared to my competitors in the market.
“The Federal Government is killing us with heavy import duties, with the poor value of naira and now that we have found an investment platform to ease the burden of recession on our business, the same government is asking us not use the platform.
The directive is to frustrate us out of business and ensure we remain poor forever.” A top source in the Committee of e-banking Heads of Nigeria, an arm of the Chartered Institute of Bankers of Nigeria, who pleaded anonymity because of the sensitivity of the issue, agreed with the CBN that the platform might be used for money laundering.
He, however, noted that the platform remained a veritable investment embraced by most developed countries. He disclosed that the apex bank was also conducting some research es underground to come up with guidelines on how to secure the investments of Nigerians on the platform.
According to him, the apex bank should have been careful in its utterances regarding the business, and should not have banned Nigerians outrightly, because the world has become a global village and Nigerians have to follow the trend.
“The process is like the conventional trade by barter, where people exchange. So, based on that, the crypto currencies will still have their place. However, since the Nigerian economy is still young, we need to protect investors.
CBN is looking into it urgently and a committee has been set up for that purpose,” he said.
ANALYSTS WARN INVESTORS
A renowned political economist, Prof. Pat Utomi, however, stated that it was the emergence of Ponzi schemes that orchestrated the entry of crypto currencies into the Nigerian financial market, as they were not typically used for regular investments. He said that if the regulators of the Nigerian currency had stated that crypto currencies were not legal tenders, Nigerians must take it like that.
He warned Nigerians to be cautious in using the digital currencies, given that they were not properly regulated and all exchanges did not go through some clearing houses system.
“This would definitely have consequences that can be risky for stakeholders, especially the Nigerian banking system,” Utomi told The Point. Head, Vertical Market Groups, Nigerian Interbank Settlement System, Mr. Samuel Oluyemi, also threw his weight behind the regulators, not ing that it was the duty of the SEC and the CBN to advise on how beneficial the digital currencies were to the economy and the investing public.
“Since neither the CBN nor SEC is the regulatory body that is controlling it, and nobody knows the operators and they are not under any regulatory framework in Nigeria, anyone doing transactions with them does so at his/her own risk,” Oluyemi said.
He added that the position of the SEC was in tandem with the standing order that returns on investment given to Nigerians must be regulated by a Nigerian body that oversees the movement of funds and the exchange of value in the country.
“However, there is nothing the SEC is doing that doesn’t have the nod of the CBN. This explains why they are putting heads together to regulate the crypto currency operations in Nigeria, such that Nigerians’ investments would not be put in jeopardy,” he added.
