The Crypto ban increased mistrust of the Nigerian government

One of the most controversial decisions by the Nigerian government in recent years was the decision to ban cryptocurrency ownership and trading, which was announced by the country’s central bank a few weeks ago.

This has prompted a lot of anger and annoyance in the country, which is one of the world’s largest crypto markets - Nigerians reportedly own around $4 billion of crypto, while transactions worth nearly $600 million were carried out in the last five years, making the country the second-largest crypto market in the world after the United States.

Thus, the Central Bank’s decision to restrict crypto trading in Nigeria has understandably brought a lot of confusion, while it is also at odds with the government’s own policy of committing to build a robust digital economy. It is no wonder then that this action has led to a deepening of mistrust towards this government for the Nigerian population.

As recently as October 2020, the country’s National Information Technology Development Agency released a draft National Blockchain Adoption Policy, which made the case for the country to adopt blockchain and crypto to build a digital economy. This would have been in line with the approach taken by the majority of governments, as well as businesses, all over the world, as they recognize the potential of crypto and blockchain.

It is also noteworthy to see just how many businesses and institutions have adopted crypto to improve their operations. One of the best examples of this is in the online gambling sector, which has effectively been transformed by the usage of crypto.

Several new online casinos have been offering users the option of playing slots with bonus via crypto tokens, while also using blockchain to safeguard their personal information, provide faster transactions, and more reliable games.

It is no surprise that these platforms have become extremely popular, and this is now the prevalent trend in the online gambling sector.

Crypto and blockchain thus have the potential to transform the way businesses operate, which is why there has been so much anger at these developments in Nigeria.

The Nigerian economy has struggled in 2020, with oil prices crashing, which led to a huge drop in Nigeria’s foreign exchange reserves as well, since oil is Nigeria’s biggest export.

Thus, with a shortage of dollars in the country, the central bank put a number of rules in place to restrict people from owning foreign exchange. However, the instability of the naira has meant that Nigerians then turned to crypto as an alternative for holding their money, as well as to conduct foreign transactions and receive remittances from abroad, both of which were also severely restricted. Thus, the value of the naira has continued to fall, and this may be one reason why the central bank is cracking down on crypto.

Nevertheless, this is still opposed to the government’s aims to transform the Nigerian economy through digital solutions. It is also likely that this will only lead to Nigerians moving to P2P trading platforms which allow trading without an intermediary, and also allow payment by non-fiat tokens and currencies.

Additionally, it has also reduced the population’s trust in the government, especially among young people, with the unemployment rate projected to hit 30% in 2021.

The CBN has stated that this decision has been made to protect Nigerians from fraud and criminal activities, while also ensuring that the development of the fintech space will continue. However, given how much Nigerians use crypto already, and the benefits it provides, it makes more sense to put robust regulations in place for protection, but continue to allow crypto ownership and trading, as that will only foster innovation and wealth creation in the long-term.

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