Nigeria’s Cryptocurrency ban: Bitcoin hits $44,000
On Monday, Bitcoin jumped to $44,000 after the electric car maker, Tesla, revealed it bought $1.5 billion worth of bitcoins as investment initiative and all this occurred despite the cryptocurrency ban currently trending in the Nigerian Fintech industry.
Tesla announced this in a filing with the United States’ Securities and Exchange Commission, on Monday stating that it bought bitcoin for “more flexibility to further diversify and maximize returns on our cash.”
The company, owned by the world’s richest man, Elon Musk, said it will start accepting payments in bitcoin for its products. It, however, warned investors of the volatility of the digital currency.
Bitcoin prices rose to a new high Monday after the disclosure, reaching $44,200. Tesla shares surged more than 2.5 per cent in premarket trading, according to CNBC.
Musk has tweeted about cryptocurrencies in recent weeks, and such posts have been credited in part with the surge in prices of cryptocurrencies.
Nigeria Bans
The announcement came just three days after the Central Bank of Nigeria ordered financial institutions in the country to reject cryptocurrency transactions and block any related accounts.
It said in a statement on Sunday that the digital currency is used for money laundering and terrorism.
The decision has sparked outrage from mostly young people in a country that is the world’s second-biggest user of virtual currencies like Bitcoins.
The statement by Osita Nwanisobi, Acting Director, Corporate Communications, said the ban on such transactions will not have any negative impact on fintechs..
“The use of cryptocurrencies in Nigeria are a direct contravention of existing law.
“It is also important to highlight that there is a critical difference between a Central Bank issued Digital Currency and cryptocurrencies. As the names imply, while Central Banks can issue Digital Currencies, cryptocurrencies are issued by unknown and unregulated entities.
“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.
“Many banks and investors who place a high value on reputation have been turned off from cryptocurrencies because of the damaging effects of the widespread use of cryptocurrencies for illegal activities.
“The role of cryptocurrencies in the purchase of hard and illegal drugs on the darknet website called “Silk Road” is well known. They have also been recent reports that cryptocurrencies have been used to finance terror plots, further damaging its image as a legitimate means of exchange.
“More also, repeated and recent evidence now suggests that some cryptocurrencies have become more widely used as speculative assets rather than as means of payment, thus explaining the significant volatility and variability in their prices.”
Former Vice President Atiku Abubakar has urged the reversal of the policy. A former deputy governor of the CBN, Kinglsey Moghalu, also advised the CBN to rather seek ways of checking risks associated with the use of virtual currencies, and not impose an outright ban.
Suzan O/Bloomberg/PT
