5HGHÀQLQJ 'LJLWDO $VVHWV LQ 1LJHULD

Bank Digital Currency (CBDCs).”

China, Ecuador, Senegal, Tunisia and Singapore, according to him, are the Àve countries that have issued digital currencies, not Cryptocurency, adding that “bankers know that they are done, if cryptocurrencies really take oͿ and replaces traditional currencies.”

Fasua said a number of bankers have invested in cryptos just to hedge their bets; but explained that “the traditional Ànancial system is deeply rooted, organised and backed by government, unlike the cryptocurrency mining space.”

Fasua further made the point that the days of cryptocurrency are here and cannot be ignored.

Speaking on the topic: “Ban on Cryptocurrency-related Accounts in Nigeria and Concerns of Global Central Banking,” Fasua stated that the proponents of the cryptocurrency believe there is a need to push back and do something diͿerent, that will mimic the attributes of a gold-backed currency in view of durability and scarcity, but better than the current system by being smart, secure and not possible for central banks to issue at will.

“If it started as a rebellion (which is the case), then you must think of the incentive for the global economy to sign on to that rebellion with you against the devil they know. This then means that until there is global acceptance of the currencies, it will continue to be easy to create panic in the crypto world and big players can dump the currency when they have achieved gains. It then becomes worse than the stock market because, for cryptocurrencies, the fundamentals are non-existent apart from an analysis of how many are adopting the currency and who is winning between an established traditional banking system and the new kids on the block,” Fasua posited.

Cryptocurrency, according to him, is heading toglobalsinglecurrency,butonemajorchallenge, he said, “is that there is a lot of losses in it and that when most coiners die, no one is able to access their investments which ab initio are encrypted with passwords, passphrases and whatnot. People don’t usually plan to die. Now, this is where regulation helps in the Ànancial markets. Apart from deposit insurance, which kicks in, in the event of the collapse of an insured and regulated Ànancial institution, the relations of a dead account holder in a traditional bank could still have access to their balances.”

Unfortunately in the case of cryptocurrency, however, once the currency owner dies without transferring the codes to any trusted aid or relative, that money is gone; with him or her.

Former Central Bank of Nigeria (CBN)’s Deputy Governor, Prof. .ingsley Moghalu, faulted CBN’s action on the cryptocurrency transactions.

For him, the ban on cryptocurrency transactions in Nigeria’s banking sector could have been handled in a diͿerent manner.

Admitting the threat cryptocurrency poses to Ànancial stability, Moghalu said a risk management approach should have been adopted in tackling the issue.

In an interview on a national television recently, Moghalu said: “When I saw news of this directive, I was a bit concerned but I was not surprised. I was not surprised because you have to Àrst of all understand that there are many dimensions to the question of cryptocurrencies. There are Ànancial stability issues and concerns.

There is the question of whether or not it is a legal tender in Nigeria because it is not; the central bank had, in 2017, put out that regulation.

But now that the apex bank has put out a new directive, basically banning all deposit money banks, from transacting in cryptocurrencies, the former deputy Governor acknowledged SEC’s recognition of cryptocurrencies, as a Ànancial asset. He recalled that in September, the Capital markets regulatory agency had said they were going to put out a regulatory framework.

“And we know that bitcoin and other kinds of cryptocurrencies have now become known as ¶freedom money. We have to go back to understand what cryptocurrencies actually are, which are virtual currencies that can be exchangedonlinetopurchasegoodsandservices and the value is not determined by the value of legal tender currencies,” he said.

Clarifying that legal tender currencies have to be used to purchase those cryptocurrencies, he said: “The most popular of cryptocurrencies is bitcoin. Also, they don’t have an underlining value, so many people would say it is speculative; because unlike a normal currency, that currency is backed up by either foreign reserves, the productive nature of the economy of the

country that owns the currency and various other elements.”

A former presidential candidate of the Young Progressive Party in the 2019 election, Moghalu noted that, “We live in a world of innovation. Cryptocurrencies bypass central banks globally.

So, there is the Ànancial stability aspect, there is political aspect, there is the private and economic investment aspect of it and there is the aspect of the business opportunities of the incomes and earnings of many young Nigerians who trade in this instrument. So, it is a very complex issue.”

The directive by CBN, according to him, was aimed at making the space di΀cult for people who deal in the virtual currency, adding that, “The CBN directive is legal, but was it the wisest way to approach either the risks of cryptocurrencies or any other consideration that it might have had" I am not sure about that and that is why I was worried on this response by the CBN.”

He interprets the hurried memo as a directive to Ànancial institutions under the control and supervisory remit of the central bank, not to deal with these digital assets, saying, “The directive is targeted at exchanges of cryptocurrencies. It makes it di΀cult, but it does not criminalise it.”

As deputy governor in charge of Ànancial stability, Moghalu was the head of the directorate that controls the Ànancial system and so, as one with an authoritative understanding of the global Ànancial system, he believes the move by the CBN was deÀnitely, not the best way to handle the situation.

“And if I was in the CBN today in that role, it is one of the departments under me that would have issued this directive. But my response as someone, who is versed in risk management will be that there is a reality today that the world in going digital and there is a lot of innovation in the world and cryptocurrency are part of it,” said Moghalu.

His attitude, therefore, would have been how the nation’s banking regulatory authority would have best managed the risks of cryptocurrencies to ensure that they do not aͿect the stability of the Ànancial system.

Considering the fact that the country is just recuperating from the groundswell impact of the EndSARS Protest which, greatly, exploited the crypto window to fund its agitation coupled with the current Sunday Igboho Southwest’s anti-Fulani domination resistance, conspiracy theorists are wont to aver that the ban may be politically motivated.

For them, the only means known to killerbandits and kidnappers, (who are largely dominated by Northern elements of the Fulani ethnic stock), is ransom collected from victims’ relatives to fund their operations.

While, on the other hand, the largely welleducated and sophisticated Southern youths found expression for their funding needs via the cryptocurrency.

That is why many believe the CBN action, considering the haste with which it came, is targeted at disrupting the growing agitations by youths from the South; in their battle against the onslaught by Boko Haram terrorists posing as killer-herdsmen to capture and destroy the Southern part of the country.

In his interaction with members of the Senate Joint Committee on Banking Insurance and other Ànancial institutions, (including ICT and cybercrime), who had summoned him to explain his actions, CBN Governor, Godwin EmeÀele stood his ground; although he enlightened the legislators on the security implication of allowing cryptocurrency a free reign on the nation’s Ànancial sector.

BrieÀng the men of the upper legislative chamber, on February 2 , 2021, EmeÀele spoke on the opportunities and threats of cryptocurrency on the nation’s economy.

The CBN Governor told the Senators that the bank is not in a popularity contest, saying its actions are applauded by all Nigerians with nothing to hide.

A΀rming the banks’ commitment to protecting all actors in the Ànancial space especially the uninformed; EmeÀele disclosed that money laundering, terrorism Ànancing, and other nefarious activities are being carried out using cryptocurrencies and the opacity of Ànancial dealings using cryptocurrencies to threaten the soundness of Nigeria’s Ànancial institutions.

The decision by the Senate to invite the CBN governor was sequel to a motion by a federal lawmaker, Senator Istifanus Gyang during plenary on February 11, on the CBN’s directive to stop Ànancial institutions from transactions in cryptocurrencies and matters arising from them.

Calling for caution, the federal lawmakers pointed out that while cryptocurrency has its negative sides, it has become the fastest-growing form of transaction all over the world.

They argued that technology has changed the way business is conducted in Nigeria and the country cannot run away from cryptocurrency.

The cryptocurrency issue is a money matter and policies that have to do with Ànancial transactions, systems and processes that are very sensitive, and which could be susceptible to varied interpretations.

Sifting through the maze of perspectives against the backdrop of the directive, it is obvious that the CBN could and can still explore other less volatile options to address the cryptocurrency challenge.

Otherwise, under the tense atmosphere Nigeria has found herself, currently, such a directive has the potential of further fanning the embers of division, simmering in her underbelly, today.

It is in the light of this, that Vice President, Prof. Yemi Osinbajo’s statement, last Friday, hit the bull’s eye. Laying his premise on two solid points, he said “First is that there is no question that blockchaintechnologygenerallyandcryptocurrencies, in particular, will in the coming years challenge traditional banking, including reserve banking, in ways that we cannot yet imagine. So we need to be prepared for that seismic shift. And it may come sooner than later.”

Already, according to him, remittance systems are being challenged. Blockchain technology, he a΀rmed, will provide far cheaper options to the kind of fees being paid today for cross-border transfers by banks.

“I am sure you are all aware of the challenge that the traditional SWIFT system is facing from new systems like Ripple which is based on the blockchain distributed ledger technology with its own crypto tokens.

There is of course a whole range of digital assets spawned daily from blockchain technology,” he said.

Thankfully, the Vice President knows that decentralised Ànance, using smart contracts to create Ànancial instruments, in place of central Ànancial intermediaries such as banks or brokerages, is set to challenge traditional Ànance.

The likes of Nexo Finance oͿer instant loans using cryptocurrency as collateral. Some reserve banks are investigating issuing their own digital currencies.

“Clearly, the future of money and Ànance, especially for traditional banking, must be as exciting as it is frightening. But as we have seen in many other sectors, disruption makes room for e΀ciency and progress,” the Vice President enlightened.

On his second point, Prof. Osinbajo made known that he fully appreciates the strong position of the CBN, SEC and some of the anticorruption agencies on the possible abuses of cryptocurrencies and their other well-articulated concerns. But he believes that their position should be the subject of further reÁection.

There is a role for regulation here, he pointed out, adding that, “It is in the place of both our monetaryauthoritiesandSECtoprovidearobust regulatory regime that addresses these serious concerns without killing the goose that might lay the golden eggs.”

The vice president believes the interventions of the relevant government agencies should be thoughtful and knowledge-based regulation, not prohibition.

“The point I am making is that some of the exciting developments we see, call for prudence and care in adopting them and this has been very well articulated by our regulatory authorities, but we must act with knowledge and not fear. We must ensure that we are in a position to beneÀt and in a position to prevent any of the adverse side eͿects or even possible criminal acts that may arise as a consequence of adopting any of these options,” he concluded.

An erudite scholar and respected law professor, himself, Osinbajo clearly aligns with the views of the former CBN deputy Governor and other voices of reason on this cryptocurrency conversation.

So, there is nothing more to add; other than to advise the current leadership of the nation’s apex bank to toe the line the vice president has drawn in his intervention.

Besides the fact that he spoke truth to power, placed the issue in its proper perspective.

What is gratifying is that his statement as the vice president, would not be taken as mere advocacy, but a public repair of the initially policy of the central bank on the matter concerning the Ànancial regulator’s management of cryptocurrency and the growing blockchain business.

Emefiele