CBOS cited financial crimes, electronic piracy and loss of value as concerns.
23 African countries have placed absolute or implicit bans on cryptocurrencies.
Q4 2021 volumes have gone up or down and how much？
The apex bank listed the high risks to include financial crimes, electronic piracy and the chances of the digital currencies losing their values.
Additionally, the central bank mentioned that cryptocurrencies carry legal risks in the country because they are not classified as money or even private money and property in the republics laws.
Moreover, CBOS noted that the currency lacks material cover and is not issued by authorized or accredited bodies that legally bind them, adding that it had noticed the global practice of promoting the trading of the currency on social media.
African Bans on Cryptocurrencies
According to the Brookings Institution, Africa is the fastest-growing cryptocurrency market among developing economies and the third-largest growing market in the world.
Chainalysis 2021 Global Crypto Adoption Index also ranks Kenya, South Africa and Nigeria among the top 10 countries in the world in terms of cryptocurrency use. However, not all countries in the continent are open to cryptocurrencies.
According to a report by the United States Library of Congress (LoC), of the 51 countries that have implemented a ban on cryptocurrencies, 23 are African countries.
While four African countries, Algeria, Egypt, Morocco and Tunisia, laced an absolute ban on cryptocurrency, 19 countries, including Nigeria, Africas largest economy, have placed implicit restrictions ondigital assets.
In February 2021, the Central Bank of Nigeria placed an implicit ban on cryptocurrencies in the country when it ordered commercial banks in Africas largest democracy to shut down all cryptocurrency-related accounts.
The order had stated that all regulated financial institutions should “identify persons and/or entities transacting in or operating cryptocurrency exchanges or facilitating payments for cryptocurrency exchange and close their accounts immediately.”
The Nigerian Securities and Exchange Commission, the countrys financial market regulator, would later set up a fintech division to study all crypto-related investments and products to assess the feasibility of establishing a regulatory framework.
Still, many questions still exist about the future of cryptocurrencies and digital asset adoption, regulation and adoption in Nigeria, Africa and many parts of the world.
