The real reasons behind the ban of crypto-currency transactions in Nigeria and 3 places where you can redeem your crypto assets.
Author: Maureen Eugene
The recent directive from the CBN left a lot of Nigerians who are into the crypto industry dazed and some are yet to comprehend the reason or reasons behind the sudden banning of all crypto transaction activities which ensued from the 5th of February 2021.
Yet the question most Nigerian crypto traders are asking is: why were cryptocurrency transactions banned? While the CBN has not given answers, a few educated guesses can be made:
Activities of fraudsters/ Money Laundering: You must have heard of the popular phrase “Yahoo Yahoo”. Well, it’s not a new thing to most Nigerians as some know what it means exactly. The phrase denotes the illegal control of large chunks of money by yahoo boys. The FBI claims that this criminal activity has put most Americans out of jobs. They further stated that these young boys use cryptocurrency to bring hundreds of millions of US Dollars from the USA and other western countries into Nigeria. Laundering money through cryptocurrency is an easy process since the number of transactions done cannot be traced or tracked. Most persons can use this as an avenue to steal and embezzle money using cryptocurrency as a backstory
Illegal Businesses: since the value of these cryptocurrencies are not fixed and they are endlessly inflating, it cannot be traced to these illegal activities. The funds can be hidden under the covering of cryptocurrency.
No refunds or cancellation policy: If funds are unknowingly transferred or mistakenly sent to the wrong wallets by trading agencies, the money cannot be retrieved or refunded. This, therefore, presents an opportunity for people or fellow traders to cheat each other
Absolute anonymity: This is more like having a ghost transaction as cryptocurrencies are considered anonymous. The criminal fraternity has seen this as a blessing as they can always adapt this to their advantage.
Devaluation of the naira: The spike in the value of cryptocurrencies recently has kept CBN on its toes as the naira equivalent is very low. Cryptocurrencies have indirectly stood as a tool to devalue the Nigerian naira, hence the CBN ban is just a way to regulate and ensure that the naira would not go into extinction.
They are unregulated: A currency that cannot be regulated by both the government and the central bank has its negative effects because no policies or laws are governing the abuse or misuse of the currency
Remittance: The remittance transaction fees that are usually charged in banks when the foreign currency is sent and received have drastically reduced as cryptocurrency traders have come up with software solutions or means to allow companies or individuals to send, receive or trade for free or just a token. This however eliminates the revenue banks and CBN gets from such transactions.
Defiance of previous account restrictions: In October 2020, during the #ENDSARS protest, the accounts of some protesters were blocked to stop the fundings of the protest. This action of the CBN forced protesters to resort to their crypto wallets to fund the protest. This act of defiance may be one of the reasons why a ban was placed on cryptocurrencies.
3 merchants that still allow trading of crypto asset
Binance: This is one of the largest trading platforms used for trading various cryptocurrencies. it was founded by Changpeng Zhao in 2017. Binance provides crypto wallets to enable its users to store electronic funds. Due to the ban, Binance has suspended deposits in naira, however, withdrawals and trading are not affected. It is believed that Binance uses regulatory arbitrage which allows traders to carry out their various transactions without CBN being aware. Hence, it’s difficult for a deterrent.
Paxful: they provide quick and professional support with possible ways to buy bitcoin from anywhere in the world. It is an easy-to-use website, Paxful gives the power of trading back to the people paving way for a more decentralized trading market. sellers pay a 1% fee to the company while buyers do not pay any fee on the site. As a result of the ban placed on cryptocurrencies in Nigeria, Paxful is helping its users with the peer-to-peer (P2P) platform where they can connect with other users on the premise that their transaction details will not be revealed to the banks.
Remitano: Remitano has Escrow protection which enables buyers to pay for coins before they’re delivered by the sellers, trusting that the platform is already in possession of the coin. It also has a secure peer-to-peer trading platform and a guaranteed speedy transaction. Remitano set up a team around banking professionals who have over time gained experience in E-currencies and financial products, so you can rest assured that competence is guaranteed. The trading company also compensates buyers with 50% of transaction fees if, within 15 minutes, transactions are not completed.
It is important to note that the CBN’S directive is not on crypto particularly. The CBN cannot ban crypto because bitcoin and other crypto assets are above restrictions. However, what the CBN has done is to put regulations on how people can buy and sell crypto currencies in Nigeria. Yet, with the influence of CBN over crypto transactions, a lot of Nigerians in the crypto industry still trade today. The aforementioned places are trusted platforms they can buy or sell assets.