Nigeria’s VP Osinbajo asks CBN, SEC to revisit decision on cryptocurrencies
Nigeria’s vice president Yemi Osinbajo has urged the Central Bank of Nigeria (CBN) to revisit its decision to prohibit cryptocurrencies transaction in the country, saying what the regulatory bank should have done is to regulate and not prohibit.
The Vice President who spoke at the bankers committee vanguard on Friday said “There is a role for regulation here.”
“And it is in the place of both our monetary authorities and SEC to provide a robust regulatory regime that addresses these serious concerns without killing the goose that might lay the golden eggs.
“So it should be thoughtful and knowledge-based regulation, not prohibition,” Osinbajo stated categorically.
The Vice President said while he “fully appreciate the strong position of the CBN, SEC, and some of the anti-corruption agencies on the possible abuses of cryptocurrencies and their other well-articulated concerns, but I believe that their position should be the subject of further reflection.”
He said regulatory bodies must “act with knowledge and not fear” as the digital currencies disruption will only make “room for efficiency and progress.”
“The point I am making is that some of the exciting developments we see call for prudence and care in adopting them, but we must act with knowledge and not fear,” he said.
On Tuesday, the CBN governor, Godwin Emefiele told the Senate that the decision to prohibit banks, non-banking institutions and Other Financial Institutions from facilitating trading and dealings in cryptocurrency is in the best interest of Nigerian depositors and the country’s financial system.
According to him, the operations of cryptocurrencies is dangerous and opaque, noting that the use of cryptocurrency contravened an existing law.
He said given the fact that cryptocurrencies were issued by unregulated and unlicensed entities made it contrary to the mandate of the Bank, as enshrined in the CBN Act (2007) declaring the Bank as the issuer of legal tender in Nigeria.
As part of measures to conserve forex, the CBN has since last year rationing dollars to endusers while banks restricted the amount their customers could spent on their credit card abroad.
This restriction on foreign currencies by CBN and banks has created market for digital currencies as many businesses and individuals took advantage of Bitcoin to carry out their transactions.
“First is that there is no question that blockchain technology generally and cryptocurrencies, in particular, will in the coming years challenge traditional banking, including reserve banking, in ways that we cannot yet imagine so we need to be prepared for that seismic shift and it may come sooner than later. Already, remittance systems are being challenged. Blockchain technology will provide far cheaper options for the kind of fees being paid today for cross-border transfers.
Osinbajo noted that “I am sure you are all aware of the challenge that the traditional SWIFT system is facing from new systems like Ripple, which is based on the blockchain distributed ledger technology with its own crypto tokens.
“There are, of course, a whole range of digital assets spawned daily from blockchain technology.
“Decentralized finance, using smart contracts to create financial instruments, in place of central financial intermediaries such as banks or brokerages is set to challenge traditional finance.
“The likes of Nexo finance offer instant loans using cryptocurrency as collateral,” the VP said.