The fast-growing acceptance of cryptocurrencies as a means of payments, money transfers and investment vehicles in Nigeria and other emerging economies has started having a direct impact on diaspora remittance, according to the Association of Bureaux De Change Operators of Nigeria (ABCON).
In its Quarterly Economic Review for the first quarter of 2020, ABCON urged the Central Bank of Nigeria to introduce measures that will counter the advantages of cryptocurrencies as a channel for diaspora remittances.
This, the association said “It is noteworthy that public acceptability for cryptocurrency exchanges are rising which could be quite accountable for the wide drop in diaspora inflows to Nigeria. Insecurity in the country is giving it greater prominence as investors and citizens are finding cryptocurrency a safe haven for their wealth in case of any eventuality.”
Bitcoin transfers surged in 2020, according to ABCON. The association attributed this to the COVID-19 pandemic that exposed cheaper and more efficient digital remittance services.
“Migrants sending money across borders to their families prefer the minimal transaction costs of cryptocurrency exchanges against the exorbitant costs of traditional money transfer companies like Western Union.
“These exchanges override the political complications of official channels.The global reach of cryptocurrencies avoids the inflation risk inherent to official currencies, especially in politically unstable countries reliant on fickle foreign investors.
“Thus, while we commend the efforts of CBN in introducing the package of Five Naira for One Dollar transfer, it can be seen from the analysis above that the challenges exceed just non-payment of foreign currency by the International Money Transfer Operators (IMTOs) and the exchange rate.
“Strategies that satisfy the most sensitive of these advantages of cryptocurrency exchanges must be introduced to redirect flows to the official channel,” it said.
The Central Bank of Nigeria banned banks from facilitating cryptocurrency payments and exchanges in an attempt to discourage people from the largely unregulated fast growing crypto space.
A position the apex bank clarified a week later following the criticism that trailed the decision.
While the apex bank later said Nigerians can trade cryptocurrencies but banks can be tools for such unregulated industry, many Nigerians continue to dump their money on several unproven cryptocurrency projects.