Nigeria’s central bank, the Central Bank of Nigeria (CBN), recently issued a warning reiterating that cryptocurrencies aren’t regulated in the country. As such, those who wish to invest in them are doing so at their own risk.
The warning puts legitimate cryptocurrencies like Bitcoin, Litecoin, and Monero in the same group as OneCoin, which is widely believed to be a Ponzi scheme. CBN’s warning aims to inform residents and financial institutions that they face risks if they get in on the crypto space, such as market volatility and exchange bankruptcy.
The warning adds that cryptocurrency-related organizations, such as Nigerian cryptocurrency exchange NairaEx, are “not licensed or regulated by the CBN.” This, the document clarifies, means those dealing with cryptocurrencies aren’t protected by law.
“Virtual currencies are traded in exchange platforms that are unregulated, all over the world. Consumers may therefore lose their money without any legal redress in the event these exchangers collapse or close business. “
The circular follows one sent by the financial institution earlier this year, in which it advised local banks to distance themselves from cryptocurrencies by telling them not to “use, hold or transact” with the technology.
The financial institution, however, may have reason to mistrust cryptocurrencies. As Quartz Africa reports, the country recently had to deal with a Russian Ponzi scheme dubbed Mavrodi Mundial Moneybox (MMM) that saw its population lose over $50 million after getting over two million users.
Once the scheme collapsed, MMM’s administrators attempted to get former users to buy bitcoin, associating the scheme with the flagship cryptocurrency. Since then, Nigerian lawmakers have branded bitcoin as a scam, and warned that those dealing with it are “gambling.”
Interestingly, according to data from CryptoCompare, bitcoin trading in the Nigerian Naira, the country’s fiat currency, has surpassed the $1.2 million mark in the last 24-hour period, despite the central bank’s warnings.
Various reports show that Nigeria was one of the countries that most used “bitcoin” as a search term online, according to Google Trends in 2017. Other countries showing heavy interest for the cryptocurrency in online search engines were South Africa, the Netherlands, Austria, and Slovenia.