Destined To Disrupt: Nigeria’s Central Bank Wants Bitcoin Regulated

Destined To Disrupt: Nigeria’s Central Bank Wants Bitcoin Regulated

Nigeria’s central bank has called for the regulation of Bitcoin to avoid it being used for money laundering, Coin Desk reports.

Bitcoin, a virtual currency that is not backed by any central bank or government, has gained prominence in sub-Saharan Africa since its inception in 2009, especially in the money transfer market as African living in the Diaspora seek cheaper and faster ways to send money back to family and friends back home.

Lack of Bitcoin agents to convert Bitcoins into hard cash in most African countries, such as Nigeria is however putting brakes on a seemingly seamless innovation.

Okwu Nnanna, deputy governor of financial system stability at the Central Bank of Nigeria (CBN) told stakeholders at an Anti Money Laundering workshop that “Virtual currency was dangerous because it was not a legal tender of any country. Hence it has a borderless nature without jurisdiction which makes it a channel for money laundering.”

“So, in order to curb money laundering, virtual currencies should be regulated,” he added.

As the largest economy in Africa, with the largest population on the continent, Nigeria has been on the radar of African Bitcoin entrepreneurs.

Bitpesa, a Bitcoin exchange and remittance service operating in Kenya, Uganda, Tanzania and Ghana, said it was looking to expand into the west African nation later this year, to capitalize on the market opportunity.

Beam, a Bitcoin service operating in Ghana, also expressed interest in Nigeria when it launched nearly a year ago, but has yet to offer services there, Brave New Coin reported.

According to Business Day, CBN had already mapped out  all the required changes in law and policy to ensure a smooth operation of Bitcoin in the country without risking international penalties over money laundering.

“Virtual currencies present a wide range of issues and challenges that require financial authorities to consider and the challenges posed are unique and call for urgent regulator responses,” said Obot Akpan, deputy director of Financial Policy and Regulation Department at CBN.

Nigeria has been tightening foreign exchange trading rules in recent months after the local currency, naira, tumbled against a globally stronger dollar as prices in its main export commodity, oil, fell since the last quarter of 2014.

CNB recently banned importers from using the foreign-exchange market for some 40 items and asked commercial banks not to take any foreign currency deposits as it seeks to conserve external reserves.

The regulator also stopped Nigerians from using hard currency from the interbank market to buy Eurobonds and foreign shares.