Why Crypto Assets Usage Cannot Be Stopped In Nigeria

For about a year and ten months now, the banking institutions based in Nigeria has stopped processing transactions for clients interacting with cryptocurrency or blockchain-based services, as if this restriction isn't enough, FX transactions have taken on quite a handful of restrictions, but of course, this is more because of how the system is suffering from liquidity crisis.

To put them out of their misery, heavy taxation has been applied on online banking transactions over about $13.5 following an average black market rate of 740 naira per dollar. So, frankly, literally almost everybody with a digital bank is taxed on a daily basis given that standard of living is rising rapidly and well over $13.5 is spent daily by these individuals. To crown it all, weekly limits have also been placed on cash transactions via POS withdrawals, an attempt to push the adoption and utilization of its central bank issued digital currency - the e-naira.

Why All This When Flexible Governance Is More Profitable?

You simply cannot put a native doctor on a white drug medication, it's against their belief regardless of its effectiveness.

This is how to simply explain the situation with Nigeria, China and the rest of the countries imposing on the citizens to discontinue the usage of these assets. Laundering money via centralized banking system is far more easy to exploiting blockchain-based protocols, so this puts their powers in cool down mode.

The theory, being pin-point however doesn't tell the whole story, you see, we live in a world where smart individuals use their intellects for fraud when it could have, as well gotten them a good pay - the right way. Fraudsters aren't dumb people, there are in fact the smartest in the world yet these talents are wasted because they don't see how much more value can have been attracted by leveraging the right models for building, this is the governments in theory.

The system of government is already way into fraud, that is, not so easy to forfeit, unless a new body is raised. Not many countries can do what is being done in El Salvador, they rather stick to a system with no accountability, given that, by default, fiat lacks transparency and traceability.

Nigerian Lawmakers Set to Pass Law That Diminishes Central Bank Influence on Crypto

"Nigeria is expected to designate cryptocurrency as capital for investment if the country’s House of Representatives votes to approve a bill that seeks to amend the Investments and Securities Act of 2007, a report has said. A Nigerian lawmaker, Babangida Ibrahim, suggested that the Central Bank of Nigeria (CBN) is not well positioned to regulate cryptocurrencies.

"We need an efficient and vibrant capital market in Nigeria. For us to do that, we have to be up to date [with] global practices. In recent time[s], there are a lot of changes within the capital market, especially with the introduction of digital currencies, commodity exchanges and so many other things that are essential, that need to be captured in the new Act."

For most of the time, it baffles literally any Nigerian how these folks have no clue or whatever of how much value they waste playing political games that are pretty short term profit-wise. Nigeria happens to be one of the biggest crypto-exposed countries, for many reasons but from personal observation, it's more about the ease in transaction and the accessibility to cross country products and services that comes with it. This is particularly why foreign businesses with a large Nigerian customer base need to integrate crypto payments for increased revenue. A Nigerian Hive mate I've been in contact with currently runs a platform due to this integration, of which without, it wouldn't be possible.

If the bill passes, Nigerian banks may begin to process crypto transactions, but frankly, I'm not sure how beneficial that will be given the state of the world economy, why do I say so?

The restrictions frankly aids the black markets to flourish, and currently, this black market is accessible via cryptocurrencies - stablecoins. Nigerians earning in USD or crypto can tap into this value and gain more swap value against the Naira easily via p2p trading. This has been profitable because bank rates for dollar exchange are highly manipulated. So if the ban gets lifted, these p2p markets will tank given that individuals can then purchase these stablecoins at low rates via bank payments and dump them on p2p traders. This further puts both dollar earners and naira earners in jeopardy as nobody has an advantage as everyone now transacts on CBN rates of which are low and increases citizen's spending.

The first few days of the ban lifting may be crazy, if I were to speculate, keeping a stablecoin balance and Naira balance to arbitrage the difference would be game - but that's only if the ban gets lifted.

Why Crypto Assets Usage Cannot Be Stopped In Nigeria

Whether or not this ban is lifted, crypto assets will still be in many Nigerians portfolios given that it grants them access to global services. What the government, stupidly do not understand is that this is an opportunity to attract foreign businesses, which would increase the net value that flows into the country. But hopefully, the next governing bodies can see the opportunities buried in this new technology and leverage it before it becomes more competitive and less profitable for many.

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