Nigerian Cryptocurrency Exchanges in Limbo After Ban

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  • Nigerian cryptocurrencies have been left in Limbo after the central bank banned banks from dealing with them
  • The edict came out of the blue and had left customers worried for their deposits
  • Nigerian cryptocurrency exchanges have moved to reassure customers while planning next steps

Nigerian cryptocurrency exchanges have spent the weekend scrambling to reassure customers after the Central Bank of Nigeria banned banks from dealing with them. The edict, issued out of the blue, severed the link between Nigerian cryptocurrency exchanges and banks, meaning that customers were prevented from depositing money from their bank accounts onto exchanges or, more importantly, withdrawing funds from them.

The Central Bank of Nigeria Stuns Users

The Central Bank of Nigeria stunned the cryptocurrency community with its ban on Friday, which caught the industry on the hop as there had been no suggestion such action was going to be taken. In an open letter to the nation’s banks, the authority stated that “dealing with crypto currencies [sic] or facilitating payments for cryptocurrency exchanges is prohibited”, referencing a cautionary note they sent to banks in January 2017.

Nigerian cryptocurrency exchanges were quick to cry foul over both the action and the lack of warning, with NairaX saying that the ban “contradicts all forward thinking directives issued by #SEC in 2020” and adding that “we stand against this oppression”. African favorite Luno responded with a statement in which reassured customers that there was no need to panic as the exchange had “always worked closely with regulators in Africa and all regions in which we operate, and will continue to do so”.

Interestingly, Luno also added that “Nigeria’s regulators have taken a pragmatic and forward-looking approach to cryptocurrency in the past”, which is in contrast to the opinion of NariaX.

Nigerian Cryptocurrency Exchanges Safer Than Face to Face Swaps

Despite the calls for calm, some customers have been naturally worried about their money:

Like other central banks, the Central Bank of Nigeria claimed that “the risk associated with transactions in crypto currency” was behind the move, although it does not state what these risks actually are. While central banks often claim that measures such as there are taken to protect customers from losses, the move may have the undesirable effect of forcing sellers to conduct peer-to-peer transactions, perhaps face to face, which are inherently more dangerous than trading on exchanges.