By: Damian Okonkwo
Often it appears to unimaginable that the Nigerian government has adopted within the country a Central Bank Digital Currency (CBDC) but at the same time still prohibits the use of other digital currencies such as Bitcoin and Altcoins within the country. However, there are a number of possible reasons why the Nigerian government is opposed to legalizing Crypto currency trading within the country. Below are a number of possible reasons why the Nigerian government is opposed to Crypto currency in Nigeria.
A. Totally Decentralized
Crypto currency as we know it is a totally Decentralized financial system for sending and receiving money. It hides the identity of both the sender and receiver and cannot be controlled by the government and Central banks. This means that the Nigerian government can no longer freeze at will the account of any citizen she indicts. Obviously, the government would like to retain control over the citizens money especially for political reasons too.
B. Money Laundering
Very often, one of the dominant reason repeatedly offered by the Nigerian government for proscribing Crypto currency is that it gives room for money laundering due to its decentralized nature. The Nigerian government has very often expressed concerns that many terrorist groups existing within the country and other unscrupulous dealers often use Crypto currency transactions as a means for sponsoring their activities. Equally the government believe that it gives fraudsters the opportunity for eloping with their loot. Hence, the government of Nigeria see Crypto currency as supporting looting and promoting money laundering.
C. Devaluation of Naira
Another interesting reason why the Nigerian government has been consistently opposed to Crypto currency trading within the country is its possible effects on the Nigerian economy. With the rapid embrace of Crypto Currency in Nigeria, it was discovered that the citizens no longer store their values in Naira but in Crypto especially in USDT. Banks were greatly alarmed as more than 55% of Naira deposited with them were immediately converted to Crypto which lies beyond their control. The effect of this has been the drastic devaluation of Naira.
D. Supports Inflation
Similarly, another sad result of the boom in Crypto currency trading in Nigeria is that it promotes inflation. This means reduction in the 'buying power' for the Nigerian naira. Thus as the citizens daily embrace USDT and other cryptocurrencies, the Nigerian naira keeps loosing value and buying power within and outside the country. The prices of goods and services within the country therefore skyrockets daily.
