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Why CBN Bans Banks from Facilitating Cryptocurrency Exchanges

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Godwin Emefiele - Investors King

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.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Bitcoin

Binance CEO Forecasts Bitcoin Surge Beyond $80,000 on Institutional Inflows

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bitcoin to Nigerian Naira - Investors King

Binance Chief Executive Officer Richard Teng has set his sights on Bitcoin surging beyond the $80,000 price level on the back of rising institutional investments into crypto-backed exchange-traded funds (ETFs).

Speaking at an event in Bangkok on Sunday, Teng highlighted the significant impact of the launch of Bitcoin ETFs in the United States earlier this year.

He noted that this development has attracted a considerable influx of institutional investors, propelling fresh funds into the cryptocurrency market.

Teng expressed confidence in Bitcoin’s upward trajectory, emphasizing that “we’re just getting started.”

Initially estimating Bitcoin to reach around $80,000 by the end of the year, Teng now believes that the cryptocurrency’s price will surpass this milestone.

He attributed this bullish outlook to a combination of decreasing supply and sustained demand within the market.

However, he cautioned that the rally wouldn’t be without its fluctuations, suggesting that the market’s ups and downs would ultimately benefit its overall health.

Bitcoin has already surged by an impressive 56% this year, reaching a record high of nearly $73,798 last week.

Despite concerns among some investors about a potential bubble, Teng remains optimistic about Bitcoin’s future trajectory.

Teng’s forecast comes in the wake of his appointment as CEO of Binance, succeeding co-founder Changpeng Zhao in November following the company’s $4.3 billion settlement with US authorities.

With relentless inflows into US spot Bitcoin ETFs since their approval in January, Teng expects further institutional adoption in the near term, with more endowments and family offices anticipated to increase their allocations into Bitcoin ETFs.

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Nigeria’s SEC Tightens Grip on Crypto: Raises Crypto Registration Fees

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Nigeria’s Securities and Exchange Commission (SEC) has announced a significant tightening of regulations governing cryptocurrency exchanges.

Under the proposed amendments, the registration fee for crypto exchanges is set to skyrocket from N30 million ($18,620) to N150 million ($93,000), a fivefold increase.

Also, application fees are set to rise from N100,000 ($62) to N300,000 ($186), while processing fees will surge from N300,000 ($186) to 1 million naira ($620).

These fee hikes signal the SEC’s intention to impose stricter oversight on digital asset exchanges and reflect a broader trend of regulatory scrutiny surrounding cryptocurrencies in Nigeria.

The SEC justified these changes by citing the need for clarity and incorporating feedback from industry stakeholders, particularly following engagements with the Central Bank of Nigeria (CBN).

The amendments also include a renaming of the rules and guidelines to “Rules on Digital Assets Issuance, Offering Platforms, Exchange, and Custody,” emphasizing the regulator’s comprehensive approach to regulating the digital asset ecosystem.

This latest development comes amid growing tensions between Nigerian authorities and prominent cryptocurrency platforms.

Just recently, Binance, one of the world’s largest crypto exchanges, found itself embroiled in a dispute with Nigerian authorities over allegations of currency manipulation, resulting in the detention of two Binance executives.

Against the backdrop of Nigeria’s decision to abandon its currency peg and allow the naira to trade freely, the SEC’s move underscores the government’s determination to assert control over the country’s financial landscape, even as it grapples with economic challenges such as inflation and currency devaluation.

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Bitcoin Retreats from Record Highs Amid Debate Over Market Speculation

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bitcoin to Nigerian Naira - Investors King

The cryptocurrency retreated from its recent record highs, igniting a debate over the speculative fervor gripping global markets.

In Asian trading on Friday, Bitcoin plummeted by as much as 5.6%, shedding its gains from the previous day when it reached a new pinnacle of nearly $73,798.

Despite recovering slightly to trade at $67,300, the retreat has triggered concerns about the sustainability of the crypto bull run.

The moderation in Bitcoin’s surge, alongside a similar trend in other top cryptocurrencies like Ether, BNB, and Solana, reflects a broader shift in investor sentiment.

With both Bitcoin’s ascent and the performance of the top 100 tokens hovering around 60% for the year, market participants are reevaluating their risk appetites amidst a backdrop of escalating inflationary pressures.

In a Bloomberg Television interview, Bank of America Corp.’s Chief Investment Strategist Michael Hartnett sounded alarms, likening the market’s euphoria to the characteristics of a bubble, particularly evident in the technology sector’s “Magnificent Seven” stocks and the soaring highs of cryptocurrencies.

The debate over market speculation is gaining traction on Wall Street, with questions looming about the vulnerability of various asset classes to a potential pullback.

Proponents of Bitcoin point to fundamental supports, such as significant net inflows into US exchange-traded funds and an impending reduction in token supply growth.

However, Bitcoin’s stumble coincided with a surge in US yields and the dollar following a report revealing a spike in producer prices, exacerbating concerns about the Federal Reserve’s ongoing efforts to rein in inflation.

Also, data from Coinglass indicates a rise in caution within the derivatives market, with a notable increase in liquidated bullish crypto wagers and a slump in funding rates for Bitcoin perpetual futures, favored by speculators.

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