Nigeria close crypto bank accounts
Cryptocurrencies,  Regulation

‘Crypto is a threat’: Central Bank of Nigeria closes exchanges’ bank accounts

An official of the Central Bank suggested that cryptocurrencies are best suited for illegal uses, and said he was alarmed by their use as a speculative asset

The Central Bank of Nigeria has ordered banks to close the accounts of anyone using cryptocurrencies, justifying its actions by saying that it felt that this new asset class is a threat.

According to a Feb. 8 report by local news outlet The Nation, the central bank decided to order all regulated financial institutions to avoid providing services to crypto exchanges in the country because it felt that cryptocurrencies were a threat. 

The central bank’s acting director of corporate communications, Osita Nwanisobi, raised concern over the privacy that those assets allow:

“The question that one may need to ask therefore is, why any entity would disguise its transactions if they were legal. It is on the basis of this opacity that cryptocurrencies have become well-suited for conducting many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.”

He’s not alone in that view. India just announced it may fast track pending legislation that would ban cryptocurrencies, CNBC India reported yesterday.

Nwanisobi also suggests that the name and nature of cryptocurrencies also “suggests that its patrons and users value anonymity, obscurity, and concealment.” He also cited the well-known deep web black market SilkRoad—shut down for seven years now—as an example of crime enabled by crypto assets. 

Treasury Secretary Janet Yellen also raised some concerns in the cryptocurrency industry by saying that she wanted to “curtail” the use of digital assets during her confirmation hearing, although the release of her more in-depth written responses to the Senate Finance Committee’s questions showed a much more even handed view.

Nwanisobi added that he was alarmed by the use of cryptocurrencies as speculative assets:

“Repeated and recent evidence now suggests that some cryptocurrencies have become more widely used as speculative assets rather than as means of payment.”

According to Nwanisobi, Bitcoin’s limited supply “has created a perverse incentive that encourages users to stockpile them in the hope that their prices rise.” 

As a result, he added, “a conglomeration of desperate, disparate, and unregulated actors” caused unprecedented price volatility that has kept institutional investors at bay.

Of course, that’s no longer entirely the case. While some remain wary, others are jumping in—a trend exemplified on Jan. 23, when a JPMorgan analysts warned bitcoin is “the least reliable hedge” due to its volatility the same day that an SEC filing by the world’s largest asset manager, Blackrock, announced that it would start investing in BTC.

Institutions actually played a role so important in the latest Bitcoin’s bull run that many attribute it to them and believe this is what makes this rise different from the previous ones.

As Modern Consensus reported earlier today, Miller Opportunity Trust could soon invest hundreds of millions of dollars in the Grayscale Bitcoin Trust according to recent documents. Also, today it was revealed that carmaker Tesla bought $1.5 billion of Bitcoin and will start accepting it for payments.

Individual investors are also making a splash, the latest being Ricardo Salinas Pliego, Mexico’s third-richest man, who followed in Tesla founder Elon Musk’s footsteps over the weekend by changing his Twitter bio to “#Bitcoin.” 

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Adrian is a newswriter based out of Pisa, Italy. He's passionate about cryptocurrency, digital rights, IT, tech and futurology and likes to think about the future in a positive way.