In brief
- The central bank's crypto ban caught Nigerian companies by surprise, said Dan Holdings CEO Danny Oyekan.
- After the ban was announced, peer-to-peer exchanges and OTC trading have been on the rise.
- It is still unclear what prompted the bank's decision.
Bitcoin-related companies are still baffled by the Central Bank of Nigeria (CBN) barring regulated entities from dealing with crypto, Danny Oyekan, CEO of investment firm Dan Holdings and social payments app Coins App, said during the latest episode of The Decrypt Daily podcast.
#CBN prohibits regulated institutions from dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges...https://t.co/OQ6MvQB8O1
— Central Bank of Nigeria (@cenbank) February 5, 2021
“Basically what happened is the central bank was kind of scared of a few things. First, I think capital controls, people were using crypto for remittances. They got concerned. And then abruptly this just came out on Friday. We initially in the space didn’t even think it was real,” Oyekan told Decrypt.
He explained that the central bank’s letter told local banks and payment processors to stop dealing with crypto companies. At first, Nigerian crypto-related companies weren’t even sure what’s going on and tried to verify the information. However, the central bank itself later confirmed the ban on Twitter.
“CBN prohibits regulated institutions from dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges,” the bank tweeted on February 5.
However, firms operating in the crypto space are still not sure what really went down that day, Oyekan noted.
“We're not sure where this is actually going, we think it is a very, very wrong move by the central bank. We felt like they should have engaged crypto exchanges and wallets and providers. And for now, people are just currently moving peer-to-peer,” he said.
Still, the recent ban won’t stop P2P exchanges or over-the-counter trading, Oyekan added. However, these methods of exchange are not as well-known as more user-friendly services. Additionally, the CBN has also limited its ability to regulate the crypto by outright banning it.
“So, a lot of people that had recently gone into cryptocurrency within the last two years don't even know what a P2P exchange is, right. And it basically means that nobody's really going to directly deal with the banks,” Oyekan noted, adding, “So I think that it was a bad move by the central bank because it stops the regulatory oversight that they would have had if the exchanges or wallet providers were dealing with the users.”
As Decrypt reported, Nigeria emerged as a true Bitcoin nation over the past year as its residents turned to crypto in the face of a struggling economy. But it risks losing all of that momentum.