Nigeria VP Tells Central Bank to Regulate, not Forbid, Crypto

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In Brief
  • Nigerian Vice President Prof. Yemi Osinbajo called for crypto to be regulated, not banned, in Nigeria.

  • The move comes after the Central Bank of Nigeria ordered bank accounts connected to crypto activity closed.

  • Governments around the world are struggling to come to terms with digital currencies.

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As Central Bank of Nigeria regulations on crypto-related bank accounts take effect, the senior politician is calling for Nigeria to take a different tack.

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Vice President of Nigeria Prof. Yemi Osinbajo spoke at a Bankers Committee meeting. He called for Nigeria to regulate cryptocurrency, instead of banning it. He called on the Central Bank of Nigeria avoid “killing the goose that might lay the golden egg”. Rather, it should control the disruptive technology instead.

Among other things, Osinbajo tweeted that “Cryptocurrencies… will challenge traditional banking, including reserve banking, in ways we cannot yet imagine…”

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Unbanking the Banked in Nigeria

Osinbajo’s remarks come as the official position of the Nigerian government changed after a ban on crypto by the Central Bank on Feb. 5.

The Central Bank of Nigeria (CBN) took an unexpected turn. It ordered all financial institutions in the country to close the accounts of those dealing with crypto. Also, the CBN required any financial institution in Nigeria involved with cryptocurrency to stop immediately.

Bankers Contra the NSEC

The CBN’s move was all the more surprising because of a previous ruling by the Nigerian Securities and Exchanges Commission (NSEC). The NSEC determined on Sep. 14, 2020, that cryptocurrencies were securities. This meant that crypto fell under its jurisdiction. However, the CBN decided that it had the right to rule on banking measures touching crypto.

Nigeria is not Alone

Disconnects between bankers and securities organs in governments occur outside of Nigeria, too. One such incident that affects the crypto community worldwide is the lawsuit between the Securities and Exchange Commission of the United States and Ripple Labs. 

The SEC is suing Ripple Labs and two of its CEOs for the illegal sale of $1.2 billion and $600 million of unregistered securities, respectively. The case comes, though, seven years after Ripple Labs settled with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

After the out-of-court settlement with FinCEN, Ripple also registered its XRP token with the State of New York. The state registration sees XRP as a digital currency. The FinCEN case changed how Ripple works in order to not be called a security.

Changes of the Guard

The American case might be closed by the end of 2020. The new U.S. President, Joe Biden, is filling in his administration. This includes the SEC Chariman’s position.

Proposed Chairman Gary Gesler goes before the U.S. Senate on Mar. 2 for his confirmation hearing. If he is confirmed, he will face calls from within the government for more clarity on crypto, including from his colleague, SEC Commissioner Hester Pierce, better known as Crypto Mom.

In Nigeria, the situation will come to a head within the bureaucracy. In this case, the next presidential election will be held in 2023.

Disclaimer

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James Hydzik is a finance and technology writer and editor based in Kyiv, Ukraine. He is especially interested in the development of regulation in the face of increasingly rapid technological change. He previously covered the CEE region for Financial Times banking and FDI magazines. An ardent believer in gut renovating eastern Europe one flat at a time, he currently holds more home renovation gear than crypto.

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