Nigerians are trading close to $4 million worth of bitcoin a week on 13 local exchanges, despite multiple warnings by authorities against investing in cryptocurrencies. Experts have called on the government to rethink its position and adopt smart regulations, “allowing innovation to move forward”. Regulators need to understand how it works before applying bans, analysts say.
Also read: Malta to Give “Peace of Mind” to Crypto Companies
Warnings Have No Effect on Nigerians
Regulators and legislators in Nigeria have taken a hardline stance on cryptocurrencies. The latest manifestation of their attitude came in the form of an investigation into bitcoin trading ordered by the Senate. There have been multiple warnings from other institutions, as well. Last year the Central Bank of Nigeria stated that “virtual currencies” were not legal tender and told banks their dealings with cryptos were at their own risk. The Nigerian Deposit Insurance Corporation has warned Nigerians that they cannot rely on consumer protection when trading cryptocurrencies.
However, all those warnings have not changed hearts and minds, as the latest trading data shows. The value of bitcoin has decreased since last year, but interest in the most popular cryptocurrency is yet to wane in Nigeria, Leadership reports. Nigerians have continued to invest, trading weekly up to N1.389 billion worth of bitcoin (>$3.8 million) in February after an average of N1.299 billion (<$3.6 million) recorded at the end of December.
Up to 13 cryptocurrency exchanges are currently operating in Nigeria. Trading on local platforms scored a weekly record high of almost 1.95 Nigerian Naira worth of bitcoin in mid-December, as news.Bitcoin.com reported. The amount is equal to $5.4 million USD under current exchange rates.
Innovation First, Then Regulation
Nigerians are investing in other cryptocurrencies, as well, and the total has reached $4.7 million weekly, according to Emeka Okoye, software developer and chief architect at Cymantiks Nigeria. He urged government institutions to rethink their approach to regulation. The expert said criticism would only fuel further speculation and encourage the use of cryptos by criminals. Okoye advised Nigerian regulators to adopt “smart regulation”, rather than outright ban:
It is an attitude of allowing innovation to move forward and let regulation follow. It is about the consumers and not about the players.
If authorities ban cryptocurrencies, they would be outlawing a tech tool, the analyst explained. Then “outlaws will use these tools, and you have no control – people will have to live with the consequences” Okoye warned. He also said that regulators need to understand the situation properly before applying any bans.
“Do they understand how it works? I can build a crypto exchange that is not domiciled in Nigeria and they cannot regulate it. I also have a foreign card and they cannot control what I do with it?” the expert pointed out.
Emeka Okoye thinks that cryptocurrency will not entirely replace fiat money but will complement it by providing for easier and more convenient transfers of wealth. In his opinion, the current trend of speculation, which is driving the value of cryptocurrency, is a distraction from its real value.
Do you think Nigerian authorities will listen to experts and change their policy towards bitcoin and the crypto sector in general? Tell us in the comments section below.
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