The Central Bank of Nigeria (CBN) has warned all Deposit Money Banks (DMBs) and other financial institutions against encouraging and facilitating cryptocurrency exchanges.
In the latest circular issued on Friday, February 5, 2021, the apex bank said on January 12, 2017 it cautioned DMBs, Non-Bank Financial Institutions (NBFIs), Other Financial Institutions (OFIs) and members of the public on the risk associated with transactions in cryptocurrency.
It, therefore, said further to the 2017 directive, the central bank wishes to remind regulated institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.
All DMBs, NBFIs and OFIs are now mandated to identify and report persons and entities dealing and operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.
It added that breaches of the directive will attract several regulatory sanctions.
Cryptocurrency continues to gain relevance among Nigerians despite warnings on the risk associated with the unregulated crypto space.
Nigeria is one of the world’s leading cryptocurrency traders and in recent months, top global cryptocurrency exchanges like Binance, Luno, etc have opened a Nigerian office while those that could not fund a Nigerian office are spending millions to sustain their operations in the Nigerian cyberspace.
Binance and other top exchanges are expected to be affected by the new directive, especially after cryptocurrency traders have started receiving calls to desist from withdrawing or transacting with platforms like Binance or have their bank account closed immediately.
A Twitter user, Nathaniel said he received a call from Guaranty Trust Bank (GTB) on Monday asking him not to withdraw from Binance to his GTB account again.
He said, “They called me on Monday, saying they noticed a withdrawal from Binance to my GTB account and that I shouldn’t do it again.”
My bank called me threatening to flag my account if I use it to transact further with crypto exchanges.
— Futurist (@nathaniel_luz) February 5, 2021
Dogecoin Sheds 9.49 Percent as Crypto Market Tumbles
Dogecoin, a meme coin aggressively pushed by billionaire Elon Musk, plunged by 9.49 percent in the last 24 hours to 0.24853 a coin after hitting a record-high of $0.74 on May 8, 2021.
The coin that started as a joke has gained 5,180.84 percent from the year to date with the total supply hitting 129.97 billion.
In the last 24 hours, investors traded dogecoin worth $679.40 million at an average transaction fee of $0.639526.
Elon Musk had aggressively pushed dogecoin and at some point signals, Tesla could adopt the meme coin as payment for its products in replacement for the out of favour Bitcoin.
A large number of cryptocurrency investors blamed Elon Musk for the current downturn of the entire crypto space with Anonymous, a decentralized international activist/hacktivist collective/movement widely known for its various cyber attacks against several governments, government institutions and government agencies, calling him an opportunist with his overvalued product, Tesla.
The decision of Tesla to pull the plug on Bitcoin by halting its acceptance as payment for its vehicles kick-started the current bearish trend but it was escalated by China’s action – banning banks from facilitating cryptocurrency payments like Nigeria.
However, it would be extended by the Federal Reserve’s new hawkish stance as investors are expected to shift their investment interests from haven assets like gold, unregulated cryptocurrency and others to bonds and other dollar assets in general.
Coinbase Cofounder Issues Serious Crypto Price Warning As Bitcoin ‘Death Cross’ Fear Spreads
Bitcoin and cryptocurrency prices have struggled last week with the crypto market’s combined value slipping under $1.5 trillion—down from $2.5 trillion in May.
The bitcoin price, after getting an unexpected boost from Tesla billionaire Elon Musk last weekend, has resumed its decline over the last few days, falling back toward $30,000 per bitcoin.
Now, as bitcoin charts show the price 50-day moving average has fallen below the 200-day moving average—a pattern known as the “death cross”—Coinbase cofounder Fred Ehrsam has warned “most” cryptocurrencies and crypto-assets “won’t work” and “90 percent of NFTs” will have “little to no value in three to five years.”
Bitcoin’s “death cross,” despite its ominous name, appears to be a lagging price indicator. The last time the trading pattern occurred in March 2020, it heralded a huge bitcoin bull run that helped even smaller cryptocurrencies surge to all-time highs.
“People are going to try all sorts of things,” Ehrsam, who has gone on to found the blockchain investment firm Paradigm since leaving Coinbase in 2017, told Bloomberg this week, warning many of those smaller cryptocurrencies won’t survive. “There’ll be millions and millions of cryptocurrencies and crypto-assets, just like there were millions and millions of websites. Most of them won’t work.”
Coinbase, the San Francisco-based bitcoin and cryptocurrency exchange, went public this year at a huge $100 billion valuation but has since seen its market cap plummet, falling by a third amid waning interest among retail traders and global regulatory pressure.
Since bitcoin was created in 2009, thousands of cryptocurrencies have been created with crypto data provider CoinMarketCap currently counting just over 10,000 different coins.
Some, such as ethereum, the second-largest cryptocurrency after bitcoin with a market capitalization of $250 billion compared to bitcoin’s $660 billion, have established themselves as cryptocurrency mainstays—while others including EOS and, more recently internet computer, have made splashy debuts only to fade away over time.
Internet computer’s ICP token is down over 90 percent from its all-time high price set shortly after its launch in May, while EOS, which made headlines when it raised $4.1 billion ahead of its launch in 2018, is trading 80 percent lower.
Ehrsam also warned against investors betting on NFTs (non-fungible tokens). The popularity of NFTs, that use cryptocurrency technology to allow all manner of digital real estate from artwork to tweets, memes and YouTube videos, to be tokenized and sold via a blockchain, has exploded over the last few months—though data suggests the market is already significantly down on its early-May peak.
Banking Giant BBVA Opens Bitcoin Trading and Custody Service in Switzerland
Spanish banking giant BBVA’s swiss entity, BBVA Switzerland, has started offering bitcoin trading and custody services.
Announcing the news on Friday, BBVA Switzerland said the services will be available to all of its private banking clients from Monday, June 21. The launch comes six months after the bank began trialing the services in Switzerland.
“This gradual roll-out has allowed BBVA Switzerland to test the service’s operations, strengthen security and, above all, detect that there is a significant desire among investors for crypto-assets or digital assets as a way of diversifying their portfolios, despite their volatility and high risk,” said Alfonso Gomez, CEO of BBVA Switzerland.
While the bank currently only supports bitcoin, it said the aim is to also offer other cryptocurrencies in the future. As for the launch of the services in other countries, BBVA Switzerland said that would depend on maturity, demand, and regulation in those markets.
BBVA said its bitcoin services are novel as clients can manage their investments alongside traditional assets in the same portfolio. Customers willing to convert their bitcoin into fiat and vice versa can do so “without delays and without the illiquidity that affects other digital wallets or independent brokers,” said BBVA. That’s because the bank operates with several sources for converting cryptocurrencies, it said, without disclosing those sources.
BBVA’s services come as more mega-banks open up to the crypto space. In recent weeks, Goldman Sachs, Morgan Stanley, Bank of New York Mellon, and other financial institutions have moved to provide crypto services to their clients.
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