Background on Central Bank Regulations

The Central Bank of Nigeria (CBN) has stirred the pot in the financial sector by directing commercial banks to freeze the accounts of two individuals involved in cryptocurrency trading. This bold move isn’t just a random Tuesday decision; it taps into a much larger strategy aimed at regulating and monitoring crypto transactions in the country.

Crypto Trading Under Fire

According to reports, J.Y. Mammanand, the director of banking supervision at the CBN, issued a notice mandating the closure of these accounts, citing a circular from February as justification. The central bank has expressed serious concerns regarding the volatility of cryptocurrency, its potential role in money laundering, and even financing terrorism. These worries aren’t just hot air; they provide a context for the banking sector’s rigid stance against digital currencies.

Details of the Crackdown

This crackdown comes as part of a broader initiative intended to close the accounts of residents or companies engaging in crypto transactions using Nigerian banks. The CBN had already placed a ban on banks participating with cryptocurrency exchanges in February. The reasoning? They argue that most crypto transactions through commercial banks are often tied to illicit activities, aka the shady underbelly of finance.

Nigeria’s Booming Crypto Market

Despite the CBN’s heavy-handed approach, Nigeria’s crypto market has burgeoned into one of the largest in Africa. Between July 2020 and June 2021, retail transaction volumes skyrocketed by over 1,200%. Is it reckless? Is it revolutionary? Only time will tell. What we do know is that Nigeria has claimed the position as the second-largest market for peer-to-peer Bitcoin trading, proving that crypto isn’t going away anytime soon.

The Statistics Speak Volumes

• Increased retail transaction volume of 1,200% from mid-2020 to mid-2021.
• Second-largest peer-to-peer Bitcoin trading market in Africa.

The Rise of the eNaira