Nigeria’s Central Bank Issues Another Warning On Cryptocurrency Investments

  • Nigeria' central bank issued a warning agaisnt cryptocurrencies, reiterating one issued earlier this year
  • The financial institution may have reasons to mistrust cryptocurrencies, although adoption has been growing in the country

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.

It reads:

“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.  “

Central Bank of Nigeria

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.

Vietnam to Soon Have a Fully-Authorized Cryptocurrency Exchange

Vietnam is reportedly set to soon have a fully-authorized cryptocurrency exchange, as two firms in the country have recently signed a memorandum of understanding (MOU) for the production of a crypto trading platform, after obtaining a license for it.

According to a recently published press release, the largest distribution company in Vietnam, the Linh Thanh Group, is going to develop the trading platform along with Switzerland-based blockchain firm KRONN Ventures AG.

The move comes after KRONN Ventures formed a consortium with financial committees from various Asian countries, including Vietnam, Cambodia, Bangladesh, and Sri Lanka. Its goal was to “build an international wiring system using blockchain technology that fits with the Asian environment.”

The document notes that an official statement from the Linh Thanh Group has stated that working with KRONN Ventures will see both create “world-class cryptocurrency exchange,” as the latter is “known widely as a leader in blockchain technology in Switzerland.”

It adds:

The industry expectation is that by combining Linh Thanh Group's massive distribution network, which is the largest in Vietnam, with the world-class technology of KRONN Ventures, the impact will be widely felt not only in Vietnam but also in other surrounding Asian countries.

Notably, the Vietnamese government has last year seized the domain of the country’s oldest bitcoin exchange, after it was accused of providing e-commerce services without registering with the government.

The country’s Ministry of Justice has, back in November, suggested several ways cryptoasset could be regulated in the country. At the time Nguyen Thanh Tu, the director of the nation’s Department of Civil and Economic Laws, said authorities carefully examined the pros and cons of regulating cryptocurrencies.

 This, even though the government has been looking to ban bitcoin mining machine imports. The move was, at the time, being justified by the potential use of cryptocurrencies in illicit activities.