Why FG Banned Cryptocurrency and the Way-forward for Investors – It is no longer a rumour that the Federal Government of Nigeria through the Central Bank of Nigeria (CBN) banned crptocurrency transactions in Nigeria. On this note, they have highlighted their reasons and proffered way-forward for investors.

Why FG Banned Cryptocurrency and the Way-forward for Investors

Cryptocurrency comprises of Bitcoin, Ethereum etc. and so many of them too numerous to mention. One may ask if the trailer going round social media on FG restricting cryptocurrency is true. Actually, yes, FG has restricted every transactions that has to deal with cryptocurrency.

In a statement on Sunday, Osita Nwanisobi, Acting Director, Corporate Communications, clarified that that the CBN circular of February 5, 2021 did not place any new restrictions on cryptocurrencies.

He recalled that all banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies.

Nwanisobi noted that the CBN’s position on cryptocurrencies is not an outlier as many countries, central banks, international financial institutions, and distinguished investors and economists have also warned against its use.

He said China, Canada, Taiwan, Indonesia, Algeria, Egypt, Morocco, Bolivia, Kyrgyzstan, Ecuador, Saudi Arabia, Jordan, Iran, Bangladesh, Nepal and Cambodia have all
placed certain level of restrictions on financial institutions facilitating cryptocurrency transactions.

CBN said in China, cryptocurrencies are completely banned and all exchanges closed as well.

Nwanisobi said even famed investor Warren Buffett has called cryptocurrencies “rat poison squared,” a “mirage,” and a “gambling device.”

“Mr. Buffett believes it is a “gambling device” given that they are mostly valuable because the person buying it does so, not as a means of payment; but in the hope they can sell it for even more than what they paid at some point.

During an online forum hosted by the Davos-based World Economic Forum few weeks ago, Andrew Bailey, the Governor of the Bank of England, highlighted the extreme price volatility of cryptocurrencies as one of the biggest flaws and explained that this flaw makes it impossible for them to be used as a lasting means of payment.

“It is not surprising he would take that position because, Bitcoin, the best-known cryptocurrency, hit a record high of $42,000 per unit on January 8, 2021, and sank as low as $28,800 about two weeks later. This is far greater volatility than is found with normal currencies.”

Reasons why FG banned the use of Cryptocurrency in Nigera by CBN

• Cryptocurrencies are issued by unknown and unregulated entities
• Its patrons and users value anonymity, obscurity and concealment and they performs money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.
• It has been used to purchase hard and illegal drugs. It has also been used to finance terror plots which damages its image.
• It has turned to speculative assets rather than as means of payment, thus explaining the significant volatility and variability in their prices.
• Its volatility in prices makes it more infidel
• It does not have any intrinsic value and do not generate returns by themselves.
• It does not have fundamentals and would never have fundamentals.