The central banks are agitated around the issue of cryptomoney and Bitcoin. Many of them want to put in place regulations. Some countries want to deploy regulation to give better security to cryptos users. Others are more inclined to curb or even prohibit the use of cryptos. This is the case in Nigeria, for example.
The ban on cryptomoney in Nigeria?
On Friday, February 5, 2021, the Central Bank of Nigeria threw a paving stone into the pond. It simply announced the banning of cryptomoney in the country. Specifically, the Central Bank of Nigeria has demanded the immediate closure of all cryptos accounts and exchanges. Failure to comply with this directive would result in « severe sanctions ».
This directive of the Central Bank of Nigeria has caught many people by surprise! Admittedly, we knew that the subject was on the table. Indeed, in September 2020, the commission on exchanges and security had announced its willingness to put in place a regulation on cryptos. However, at the time, the commission had made it clear that the aim was to provide more protection and transparency for cryptos users.
The new central bank directive seems to show that this virtuous objective has lost its way! This decision is all the more surprising given that Nigeria is considered to be the most Bitcoin-friendly country in Africa. In the face of inflation, Bitcoin has managed to make a place for itself on many stock exchanges. What if the real reason for this decision was more political than economic?
The real reason behind Nigeria’s ban on cryptos
In order to understand this decision by the central bank, we need to look at the political context of the country. Indeed, for several months now, Nigeria has been facing political unrest. These disturbances are reflected in demonstrations and regular clashes with the police. This tense climate culminated on 20 October 2020 when 12 people were shot dead by the police during a demonstration. A total of 51 people are reported to have been killed in October.
« A direct link can be established between the anti-SARS demonstrations – which are partly financed by cryptomoney – and these latest regulations. »
Joachim MacEbong, Analyst at SBM Intelligence
Public mistrust crystallizes around a particular section of the police force, called SARS. This team is suspected by many of committing violence against the population during demonstrations. Faced with this situation, an anti-SARS movement has emerged and led to the dismantling of this team. However, this movement is mainly financed by cryptomoney. Indeed, it has been shown that the main organizers of the movement have received payments in Bitcoin.
The government’s movement against the cryptoskills seems to be more part of a desire to drain the resources of this movement, which is considered to be insurgent. The government’s mistrust of the crypto-currencies does not necessarily seem to be economic. This means that the government may have to reconsider its position depending on the evolution of the political context in the country.