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Why CBN Bans Banks from Facilitating Cryptocurrency Exchanges

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Why CBN Bans Banks from Facilitating Cryptocurrency Exchanges

From Facebook to Twitter, influencers, cryptocurrency traders and interested stakeholders have hinged CBN’s cryptocurrency ban on lack of knowledge of the blockchain technology or the crypto space.

Meanwhile, it was the peculiarities of the Nigerian economy that necessitate CBN’s intervention in the crypto space.

The CBN is looking to revive the economy, create new jobs, deepen productivities and generally broaden growth.

However, the amount of money flowing into the crypto space at the expense of Nigeria’s real sector is weighing on the nation’s economic recovery and disrupting CBN strategies.

Nigeria’s investors that are being forced to invest in the real sector suddenly started dumping money on cryptocurrencies due to the ongoing bullish run.

The CBN needs all help it can get to curb capital outflow and improve the economy, not build Bitcoin or other cryptocurrencies created by foreign entities.

Dollar scarcity and the continuous plunge in Naira value despite CBN efforts is partly because of scarcity created by firms like cryptocurrency exchanges that buys and sells dollar at black market rates.

They are part of the reasons the black market thrives despite efforts to curtail their activities. They create forex scarcity given the fact that they added to manufacturers and other importers struggling to access dollars in that section of the forex.

Also, the data that is coming from the crypto exchanges shows Nigeria’s crypto transaction volume is more than the equities market even with the equities market gaining 50.03 percent in 2020.

Busha said it recorded $219,208,193 in transaction volume in 2020 while BuyCoins did $141,395,605.75.

Bitsika that deals in cryptocurrency and payments said it processed a total of $39,953,115 in transactions.

Luno, Remitano, Binance, Paxful and others are yet to release their numbers. Meaning, crypto volume could more than double the Nigerian Stock Exchange trading volume for the year.

In fact, a report from UsefulTulips revealed that Nigerians transacted $32.3 million worth of Bitcoin in October 2020 alone. While Paxful has said Nigeria’s traded 60,215 Bitcoins worth over $566 million in the last five years on its platform, this excludes Ethereum and other cryptocurrencies.

According to Statista, “Nigeria’s interest in Bitcoins reached a peak during the summer of 2020, reaching the highest level since early 2018. This conclusion reveals itself after investigating Bitcoin trading volume against domestic currencies used for the transaction of the virtual currency. The African country was said to be one of the three countries with the most Bitcoin trading in the world in 2020.”

It indicates that without cryptocurrency trading investments in the real sector or the Nigerian Stock Exchange could have grown more.

It is the same with the real sector, as long as investors have options with better-projected returns they won’t care about the real sector.

People that are saying businesses will die, how many cryptocurrency exchange firms are in Nigeria? Less than 30, compared that to the millions of businesses dying because of bankruptcy and poor economic productivity. What about the rising unemployment rate due to weak industries?

Also, do not forget that cryptocurrency traders/investors do not pay taxes, therefore, FG generates nothing from it, yet it keeps hurting its strategies and economic productivity at large.

All these coupled with the fact that the crypto space is not regulated and a slight policy adjustment in the U.S or other top trading nations could plunge the entire industry into disaster and millions of Nigerians into poverty rank, are the reasons the CBN moves to curb its excesses.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Jesse Powell Says Bitcoin Could Hit $1 Million Per Coin

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Kraken CEO Sees $1 Million Bitcoin in the Next Decade

The Chief Executive Officer and co-founder of Kraken Exchange, Jesse Powell, has made a bold Bitcoin prediction in a recent interview with Bloomberg.

Powell said Bitcoin could hit $1 million in the next decade, adding that supporters of the crypto asset are already saying it could replace all major fiat currencies.

He went on to predict a disruptive future that would stretch even the imagination of the most ardent crypto fans.

We can only speculate, but when you measure it in terms of dollars, you have to think it’s going to infinity,” he said. “The true believers will tell you that it’s going all the way to the moon, to Mars and eventually, will be the world’s currency.”

He added that his San Francisco-based Kraken is looking to go public next year.

The CEO explained that Bitcoin bulls see surpassing the combined market value of the dollar, euro and other currencies.

The dollar “is only 50 years old and it’s already showing extreme signs of weakness, and I think people will start measuring the price of things in terms of Bitcoin,” he said.

Bitcoin declined by 4.31 percent to $48,329.97 per coin amid rising yields and growing economic recovery.

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MicroStrategy Dumps Over $1 Billion on Bitcoin, Now Holds $4.78 Billion BTC

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MicroStrategy Dumps Over $1 Billion on Bitcoin, Now Holds $4.78 Billion BTC

MicroStrategy, a business intelligence firm, announced it has purchased another 19,452 Bitcoin worth $1.026 billion.

The company joined Square and other companies that bought the dip witnessed earlier this week after Elon Musk, Bill Gates and Janet Yellen commented on the fast-rising digital currency.

MicroStrategy now holds 90,531 Bitcoin worth $4.78 billion, more than Elon Musk’s Tesla acquisition of $1.5 billion.

Michael Saylor, the Chief Executive Officer (CEO), MicroStrategy continues to pursue a coin acquisition strategy now codified in the business intelligence company’s mission.

Square purchased 3,318 Bitcoin at an estimated $170 million value on Tuesday when the world’s most dominant cryptocurrency dipped to $45,000 before rebounding to the current level.

Bitcoin presently trading at $49.233.71 per coin as of the time of writing.

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CBN, SEC Anchor Cryptocurrency Ban on Financial System Protection

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CBN, SEC Anchor Cryptocurrency Ban on Financial System Protection

The Central Bank Governor, Mr Godwin Emefiele, on Tuesday said the bank’s decision to prohibit deposit money banks, non-banking institutions and other financial institutions from facilitating trading and dealings in cryptocurrency was in the best interest of Nigerian depositors and the country’s financial system.

Emefiele said this while briefing a joint Senate Committee on Banking, Insurance and Other Financial Institutions; ICT and Cybercrime; and Capital Market, on its directive to institutions under its regulation.

These were according to a statement from CBN titled ‘Cryptocurrency: We acted in Nigerians’ best interest – Emefiele’.

Describing the operations of cryptocurrencies as dangerous and opaque, the CBN governor said the use of cryptocurrency contravened an existing law.

He said the fact that cryptocurrencies were issued by unregulated and unlicensed entities made it contrary to the mandate of the bank, as enshrined in the CBN Act (2007) declaring the bank as the issuer of legal tender in Nigeria.

Emefiele, who also differentiated between digital currencies, which central banks could issue and cryptocurrencies issued by unknown and unregulated entities, stressed that the anonymity, obscurity and concealment of cryptocurrencies made it suitable for those who indulge in illegal activities such as money laundering, terrorism financing, purchase of small arms and light weapons and tax evasion.

Citing instances of investigated criminal activities that had been linked to cryptocurrencies, he stated that the legitimacy of money and the safety of Nigeria’s financial system was central to the mandate of the CBN.

He declared that cryptocurrency was not legitimate money because it was not created or backed by any central bank.

“Cryptocurrency has no place in our monetary system at this time and cryptocurrency transactions should not be carried out through the Nigerian banking system,” he said.

Also speaking, the Director-General, the Securities and Exchange Commission, Mr Lamido Yuguda, clarified that there was no policy contradiction between the CBN directive and the pronouncements made by the SEC on the subject of cryptocurrencies in Nigeria.

He explained that the SEC made its pronouncement at the time to provide regulatory certainty within the digital asset space due to the growing volume of reported flaws.

Prior to the CBN directive, he said, the SEC had in 2017 cautioned the public on the risks involved in investing in digital and cryptocurrency.

He said that the CBN, the Nigeria Deposit Insurance Corporation and the SEC had between 2018 and 2020 issued warnings on the lack of protection in investments in cryptocurrency.

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