The Vice President of Nigeria, Professor Yemi Osibanjo has said there is need to regulate cryptocurrency in Nigeria instead of prohibiting it.
The VP recently made this statement as the Central Bank of Nigeria and the SEC continues to hold fast to their position that cryptocurrency is a threat to the Nigeria financial system.
On the 5th of February, the Central Bank published a circular prohibiting Financial Institutions from dealing with individuals or entities involved in cryptocurrencies. The Bankers Bank made a follow up statement a few days after saying cryptocurrency is used for illicit activities.
At the Central Bank forum, the Vice President said:
“There is need for regulation and not prohibition of Cryptocurrency. On the very topical issue of blockchain technology, digital assets, and cryptocurrencies let me say two things.
“First is that there is no question that blockchain technology generally and cryptocurrencies, in particular, will in the coming years challenge traditional banking, including reserve banking, in ways that we cannot yet imagine so we need to be prepared for that seismic shift.
He said blockchain will provide far cheaper options for cross border transfers. And it may come sooner considering existing remittance systems are being challenged.
The VP continuing said “I am sure you are all aware of the challenge that the traditional SWIFT system is facing from new systems like Ripple which is based on the blockchain distributed ledger technology with its own crypto tokens. There are, of course, a whole range of digital assets spawned daily from blockchain technology.“
“Decentralized finance, using smart contracts to create financial instruments, in place of central financial intermediaries such as banks or brokerages are set to challenge traditional finance.
“The likes of Nexo finance offer instant loans using cryptocurrency as collateral. Some reserve banks are investigating issuing their own digital currencies. Clearly, the future of money and finance, especially for traditional banking, must be as exciting as it is frightening.”
“But as we have seen in many other sectors disruption makes room for efficiency and progress.“
“Secondly, I fully appreciate the strong position of the CBN, SEC, and some of the anti-corruption agencies on the possible abuses of crypto currencies and their other well-articulated concerns. but I believe that their position should be the subject of further reflection.”
“There is a role for regulation here. And it is in the place of both our monetary authorities and SEC to provide a robust regulatory regime that addresses these serious concerns without killing the goose that might lay the golden eggs.”
“So, it should be thoughtful and knowledge-based regulation, not prohibition. The point I am making is that some of d exciting developments we see the call for prudence & care in adopting them, but we must act with knowledge and not fear”
In a Press Conference, the CBN Governor Godwin Emefiele said:
“cryptocurrency is issued, is used rather to describe the activities of players in an electronic dark world where transactions are extremely opaque, they’re black they are not white, they are not visible and they are not transparent.”
“In another parlance, these are people who deal in transactions that not only do not want a trail but indeed by its nature cannot be trailed.”
” I’m sure that these definitions alone are scary enough to create anxiety for any regulator or central bank or fed in any part of the world and that’s the reason that virtually all regulators in the world do not recognize it since many Nigerians delved into its usage, we’ve been studying its development and paying close attention to occurrences in that space now, we know enough at this stage to decide that a continuation of these opaque activities significantly threatens the safety and soundness of our financial system and like you know the CBN has a major and primary responsibility as a primary regulator to protect activities of all actors and stakeholders and particularly uninformed actors in that space in the finance system from other actors who may wish to take advantage of their lack of or limited knowledge to rip others uninformed people off.”
The Central Bank Governor, Godwin Emefiele appearing before the Senate last Tuesday said the prohibition is in the best interest of the nation.