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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.

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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Bitcoin

Bitcoin ‘Whales Are Re-Entering As Risk Appetite Returns’, Says Stack Funds Research

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Bitcoin-Investors King

On Wednesday, Lennard Neo, Head Of Research at Stack Funds, a Singapore-based crypto-focused fund management company, explained why they believe that “Bitcoin is very close to the bottom.

His comments about Bitcoin were delivered in a research note (titled: “Strong support observed as Bitcoins get scooped up at $30,000”), which was published yesterday.

The research analyst wrote:

“We have observed a meltdown in long liquidations (7D MA) over the past few weeks. This coupled with the Leverage ratio (grey line) falling to a 2-year low after dipping below that of March 2020 levels, provides evidence that traders are more cautious in taking positions.

“Inflows for Bitcoin have skewed to spot accumulation as opposed to speculation, as investors match their expectations towards a longer-term horizon – signaling less propensity to sell.

“In the face of the recent sell-off, we also see significant support levels around the $30,000 handle, with substantial bids coming in to fill up the offers. The strength comes on the back of Microstrategy accumulating more Bitcoins, and we have noticed that Whales are also re-entering the market as risk appetite returns. Short squeeze hunters have also begun waning away in the near term as markets continue to establish ground on a consolidation phase.“

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Bitcoin

Canaan Begins Its Own Bitcoin Mining Operations in Kazakhstan

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canaan- Investors King

Bitcoin mining machines manufacturer Canaan has started mining bitcoin in Kazakhstan, following the crackdown on bitcoin mining in China.

Canaan said its AvalonMiner units are already in operation in Kazakhstan. When asked how many units and of which model has been deployed, a Canaan spokesperson declined to comment on specifics but said “a first batch of small-scale mining machines” have been deployed to start with.

Canaan foresees “a gradual ramp-up to full operational functionality over time,” the spokesperson added. The company has partnered with local mining companies in Kazakhstan for the initiative, they said.

China-based Canaan has been preparing to launch a crypto mining business in Kazakhstan for some time now. Earlier this month, the Nasdaq-listed company opened its first overseas after-sales service center in Kazakhstan as its global sales continue to increase.

Kazakhstan appears to be growing in popularity for bitcoin mining after China moved to shut down local bitcoin mining farms last month. Kazakhstan is close to China and has one of the cheapest electricity rates in the world.

Earlier this week, China-based BIT Mining, formerly known as 500.com, also shipped some of its bitcoin mining equipment to Kazakhstan. The company is set to send more machines to the country next month.

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Cryptocurrency

Andreessen Horowitz Officially Launches New $2.2B Crypto Venture Fund

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Andreessen Horowitz /(a16z)- Investors King

Andreessen Horowitz (a16z) — prominent venture capital fund led by Ben Horowitz and Marc Andreessen — announced Thursday the close of its third crypto venture fund, a $2.2 billion fund that the firm says is the largest of its kind.

The new “Crypto Fund III” will be co-led by Chris Dixon and Katie Haun.

“The largest crypto fund ever raised to date, Crypto Fund III is a validating moment for the ecosystem and another sign that crypto becoming an ever more mainstream part of our financial infrastructure,” the firm said in a press release.

Rumors of Andreessen Horowitz (also known as a16z) raising a mega-fund have appeared in various reports in recent months. The Financial Times reported in April that the California-based investment firm would be raising $1 billion for a crypto fund. In late May, tech blogger Eric Newcomer wrote that the firm was raising $2 billion.

A source familiar with the raise now told The Block that interest came mostly from limited partners in the firm’s previous crypto funds, which have seen large returns. a16z netted more than $440 million from selling Coinbase stock soon after the exchange made its public markets debut on Nasdaq, according to CoinDesk.

a16z’s mandate in crypto has been broad, ranging from decentralized finance (DeFi) to bitcoin applications to so-called Web 3, or a decentralized version of the internet. The firm’s portfolio includes Dapper Labs, Celo, Uniswap, and Near.

“This fund allows us to find the next generation of visionary crypto founders, and invest in the most exciting areas of crypto,” Dixon and Haun wrote in a blog post. “We invest in all stages, from early seed-stage projects to fully developed later-stage networks.”

In addition to securing more than $2 billion to invest in crypto, a16z’s crypto business has been hiring aggressively. It has made a number of key hires including Anthony Albanese, who joined the firm last year from the New York Stock Exchange. Albanese is now being promoted to chief operating officer of a16z crypto.

The firm also hired Bill Hinman, a former director at the Securities and Exchange Commission, who once said ether (ETH) is not a security, and Rachael Horowitz, a veteran Silicon Vally communications strategist who previously was the top communicator at Coinbase, also recently joined. Horowitz has also held positions at Twitter, Google, and Facebook.

Additional new hires include policymaker Tomicah Tilleman, who is joining the firm as global head of policy after serving as a senior advisor to President Joe Biden.

“As with any new computing movement, crypto has endured a variety of challenges and misconceptions,” Dixon and Haun said. “That’s why we are also bringing together heavy-hitters across several functions to help translate “crypto” to the mainstream.”

The announcement of Crypto Fund III follows a flurry of recent activity in crypto venture investing. Despite the slump in coin prices, investors have been raising large sums of cash to pour into new crypto startups.

Framework Ventures recently announced a $100 million new fund to invest in DeFi. Blockchain Capital, meanwhile, recently announced a new $300 million fund with backing from tech giants PayPal and Visa.

Data from The Block shows investors poured more than $8.8 billion into startups during 2021, compared with 3.07 billion in all of 2020.

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