Here’s how Nigerian cryptocurrency exchanges are responding to CBN’s Ban Cryptocurrency

Two weeks in the past, the Central Financial institution of Nigeria (CBN) requested that banks and different monetary establishments shut the accounts of cryptocurrency exchanges within the nation, inflicting a ruckus. 

Its reasons (which have since been countered) have been centered on how crypto is used for fraudulent functions and the anonymity of crypto customers. 

It’s necessary to notice that the CBN didn’t ban cryptocurrencies in Nigeria; you’d need to outlaw crypto exchanges and shut down the web to attain that. 

What the Central Financial institution of Nigeria did was minimize the hyperlink between crypto exchanges and their customers. 

Utilizing the analogy of a supply system, consider it as them refusing to let vehicles (i.e. crypto exchanges like BuyCoins, Bundle, Luno and Quidax) ship items (crypto) to shoppers by its bridges (banks and fee firms that facilitate the move of funds).

In response to the ban, numerous crypto exchanges have been compelled to announce potential subsequent steps to their prospects.

Peer to Peer (P2P) buying and selling

Consider it as an act that finds two individuals transacting immediately with out an middleman or third social gathering. 

Crypto P2P: On this case, individuals who wish to promote bitcoin put up their provide and consumers bid for it. This occurs on the blockchain community. 

It might be slower than the earlier buying and selling association since you’d have to be matched with another person who needs your provide. 

Nevertheless, as a result of lots of people are buying and selling crypto, the wait shouldn’t be lengthy. 

Naira P2P:  Earlier than crypto exchanges turned well-liked, the first method individuals purchased or bought cryptocurrencies was by discovering consumers or sellers and transacting with them utilizing their financial institution accounts. This mannequin has co-existed with the exchanges, nevertheless, individuals favoured utilizing exchanges due to the belief aspect. 

Because of this ban, crypto exchanges are stepping in to assist out by offering some type of scrutiny. They assist by connecting verified events.

The exchanges can’t completely assure that the particular person you’re sending cash to shouldn’t be fraudulent however what they’ve are the small print of the particular person on their platforms. 

Yet another factor to notice right here is that as a result of crypto transactions are banned, the descriptions of financial institution transfers is not going to be crypto-related.

Use of other currencies 

For the reason that main constraint right here is to not commerce crypto utilizing Naira, crypto exchanges have determined to incorporate an choice for individuals to commerce utilizing different currencies.

Greenback: Exchanges like Quidax permit their customers to commerce with the US greenback – the world’s most traded foreign money. 

This feature works finest for individuals with international financial institution accounts, as Nigerian greenback domiciliary accounts are nonetheless beneath the purview of the CBN. 

Secure coin: Because the title implies, stablecoins are cryptocurrencies which can be much less risky than different crypto belongings. 

Consider it this fashion: it’s widespread to see the worth of cryptocurrencies transfer in extra of 10% in both course inside a number of hours. So by 10 am 1 Bitcoin might be $34,000 after which by 1 pm 1 Bitcoin might be anyplace from $37,000 to $30,000. 

This makes many cryptocurrencies unsuitable for on a regular basis public use. To reduce the worth swings that happen in a crypto asset, secure cash have been created. 

They’re often pegged to fiat currencies just like the greenback and a few exchange-traded commodities.

In 2020, Buycoins launched the Naira token (NGNT), a digital foreign money clone of the naira; a stablecoin. 

NGNT is backed by the world’s main digital greenback stablecoin – USDC. USDC is issued by regulated monetary establishments in the US. 1 NGNT is the same as 1 Naira. 

The objective of this stablecoin is to ease the transition from fiat foreign money (Naira) to cryptocurrency. As soon as the transition is finished, crypto merchants don’t have to fret about being affected by the federal government’s ban. 

Whereas this can be a good growth, there are questions round how individuals should purchase or promote the NGNT with out the regulator interfering. Additionally, it’s price maintaining a tally of the soundness of this stablecoin, as it’s possible for it to turn into unstable.

Increasing to different African nations

Crypto exchanges like Quidax and Bundle have introduced plans to increase into different African nations. Their plans make enterprise sense and scale back the chance of working a enterprise that’s solely reliant on the Nigerian market.

So there it’s: Peer to see buying and selling, use of other currencies, and enlargement to different African nations. 

Regardless of all these strikes, the exchanges are nonetheless determining the right way to adapt to those modifications pending a reversal from the regulator – if it ever occurs. 

And whereas the determining is going on, it may spur the creation of latest merchandise, in addition to improve the variety of direct crypto transactions e.g shopping for a brand new automobile utilizing bitcoin – Good day Tesla!