By: Robert Obioha
Before delving into the issue surrounding the recent ban on cryptocurrency transactions by the Central Bank of Nigeria (CBN) under the leadership of Godwin Emefiele, let me observe that right now many Nigerians, including the youths, are underemployed and unemployed. Apart from being unemployed, many of them are excluded from the levers of political power and therefore political decision-making.
The nation’s political system is skewed against many Nigerian youths, especially those from the south in terms of federal appointments ostensibly due to misapplication of the quota system and undue nepotism. The recent list of those shortlisted for job interview by the Nigerian Customs which was published in some national dailies will rightly bear me out.
Arising from the foregoing ugly scenario, some of the youths have taken to ‘yahoo yahoo,’ a euphemism for internet fraud and other illegal means to make ends meet. Some have also taken to legitimate means of livelihood through trading and entrepreneurship despite their being categorized as ‘lazy youths.’ Many have travelled abroad in search of greener pastures and became highly disillusioned because their dreams were aborted.
Many have learnt to depend on betting as a means of survival. And many betting businesses have sprung up in Nigeria to as some of the owners of the betting business would have us believe, ‘lift them out of poverty.’ Do you blame them? It is a fact that some of the youths are university graduates, who ought to be engaged in productive economy but our warped capitalist economic system, is suffocating for young businesses and entrepreneurs.
As a result of the socio-economic confusion, many of them have embraced forex trading; ponzi schemes which come in various shapes, sizes and colours and which promise unrealistic profits. Others have embraced transactions in cryptocurrencies and so on and so forth. Forex trading and trading in digital currencies, especially bitcoin, and others have empowered many Nigerian youths and given them a new lease of life. This is a reality the CBN must come to terms with.
An investigation has revealed that many Nigerian graduates and varsity students are engrossed in digital and virtual currency investments. Some of them are aware of the stock market and some money market investments available in Nigeria, but the killing of these investments by greed, poor regulation and supervision has made them unattractive to new investors like them. It is even difficult to do any business in the country with epileptic power supply, multiple taxes and other constraints.
It is against this backdrop that the recent ban on cryptocurrency transactions by the CBN will be critically evaluated. The apex bank banned the transactions on cryptocurrency due to the following reasons. One is that cryptocurrencies are reportedly issued by unregistered and unlicensed entities. Two is that their use in Nigeria is against the key mandates of the CBN as stipulated in the CBN Act of 2007, as the issuer of legal tender in the country. Based on this, the apex bank sees the use of cryptocurrency in Nigeria as an illegality and must be halted forthwith.
The CBN also wants to protect the financial system and Nigerians (the youths) from the risks associated with cryptocurrency transactions. It has reasoned also that the unbridled use of cryptocurrency can upset the integrity of the financial system as well as financial stability. The bank quickly reminds all of us that there is a difference between a central bank issued digital currency and cryptocurrencies. We have been told that while the CBN can issue digital currencies, cryptocurrencies are issued by unknown and unregulated entities. Again, operators of cryptocurrencies value anonymity, obscurity and concealment.
Due their opacity, cryptocurrencies are suitable for illegal activities such as money laundering, terrorism financing, buying of illegal weapons and tax evasion. The criminal use of cryptocurrencies such as terrorism financing, money laundering and purchase of small arms and light weapons should not be overlooked. Again, any monetary system that can upset the national economy must be viewed with utmost suspicion. This is where the CBN can be said to be acting in the right direction. But the CBN should also be reminded that other monetary systems can be used for criminal activities as well. Criminality is not limited to transactions on crypto or virtual currencies as the CBN wants us to believe.
However, we must tread with caution to avoid being missed out in the coming global digital economic revolution. There is need to balance the fear of the unknown with the hazards of what is present. We must not miss the future because of the morbid fear of today. Despite these ills, the use of cryptocurrency is allowed in the United States. Nigeria, China, Iran, Bolivia, Nepal, Bangladesh, Ecuador and Morocco are among countries that have restricted transactions on cryptocurrency.
While it is good for the CBN to protect Nigerians and the economy from the fraudulent use of cryptocurrencies, we enjoin the apex bank to see how the banking system can tap into the new global currency for the benefit of Nigerians and the economy. Since Nigerians are doing well in the virtual economy, efforts should be made by the apex bank to maximize such gains and not stifle them. There is need to domesticate the market because it may indeed be the future of global monetary system. In other words, we should have our own cryptocurrency trading systems, regulate and control them. We should not run away from the new currency innovation. The way things are now, Nigeria cannot isolate itself from the global digital currency revolution. We must reap from its numerous benefits.
The CBN should therefore be cautious in dishing out new and existing orders on cryptocurrency transactions. Let the bank carry out more critical studies on digital currencies which the US and some countries are embracing. Banning transactions on cryptocurrency will make our youths migrate to other platforms to carry out the trade. This is easy to do in an internet world, where barriers of distance and location are easily overcome. If our youths migrate to other platforms to ply their trades, our loss will be other people’s gain. This is a pitfall we must avoid by all means.
Therefore, the CBN must occupy itself with how to make the economy good for all Nigerians. Right now, the economy is suffocating and not good enough for business and foreign investments. The CBN should dismantle the double window exchange rates that thrive in opacity and corruption. The current exchange rates benefit the more those who trade on dollar than those engaged in productive activities that will uplift the economy.