Nigeria believes that banning bitcoin does not work and lifts the bans

The Central Bank of Nigeria (CBN) has announced the suspension of its ban on cryptocurrency trading imposed in 2021. The historic decision, released on Friday (22), indicates that the country’s government has realized that banning Bitcoin will only create digital currency. gain more acceptance.

The new policy represents a change from the previous decision in February 2021, which ordered the country’s banks to close accounts of customers who purchased cryptocurrencies. The ban used superficial arguments, such as Bitcoin’s alleged use for money laundering and terrorist financing.

However, the recent CBN circular signals a growing understanding of the importance and potential of digital assets in today’s economy.

With this change in stance, Virtual Asset Service Providers (VASPs) in Nigeria can now work with bank accounts, albeit under certain conditions.

The Nigerian Securities and Exchange Commission will be responsible for regulating these providers, requiring a minimum deposit of 500 million Naira (approximately US$550,000) to obtain a license.

This requirement may pose a challenge for smaller market participants, but it is an important step towards legitimizing and structuring the sector.

Yellow Card, a pan-African broker, has already expressed interest in applying for a license immediately, highlighting the market’s willingness to respond to these regulatory changes. The lack of a bank account in Nigeria has been a substantial obstacle for the business, which can now be overcome.

Nigeria discovers that banning Bitcoin is futile

Nigeria, Africa’s most populous country, has been a fertile ground for cryptocurrency adoption, especially among its young and tech-savvy population. Despite the ban in 2021, the Nigerian population ignored the government and turned to peer-to-peer methods to purchase cryptocurrencies.

Seeing that the volume of cryptocurrencies in the country grew even after the ban, the central bank decided to adopt the phrase: “if you can’t beat them, join them,” marking new guidelines for financial institutions and banks were launched.

The ban on Bitcoin and other cryptocurrencies by governments like Nigeria and China highlights an interesting and complex phenomenon in the world of digital currencies. Both countries have introduced significant restrictions on cryptocurrencies but have paradoxically seen an increase in trading volumes.

Cryptocurrency companies in Nigeria will now be required to obtain a Bank Verification Number (BVN) from every director and owner of cryptocurrency companies. Companies interested in issuing tokens in Nigeria must also file a white paper with the SEC and wait a month for approval.

Despite this progress, banks are still prohibited from directly engaging in activities such as trading, holding or trading digital assets on their own accounts. The measure aims to strike a balance between innovation and stability and financial security.

The development is especially significant in Nigeria, a country that has witnessed mass adoption of cryptocurrencies despite the government’s previously restrictive stance.

According to a report by Chainalysis, the volume of cryptocurrency transactions in Nigeria grew by 9% between July 2022 and June 2023, reaching a total of $56.7 billion. This growth demonstrates the resilience and adaptation of the Nigerian market to changing regulatory conditions.

The CBN’s decision is therefore a milestone for Nigeria and a signal to the world that all attempts to ban cryptocurrencies have failed.

The experiences of both Nigeria and China with banning Bitcoin and other cryptocurrencies highlight a central truth in the world of cryptocurrencies: their decentralized nature and the growing public demand for these digital assets make ban attempts not only ineffective, but also counterproductive.

This suggests that governments may need to explore more nuanced regulatory strategies to address the growth and popularity of digital assets.

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