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Bitcoin Fever Catches the Attention of Nigeria’s Lawmakers

Last Updated March 4, 2021 5:04 PM
Gerelyn Terzo
Last Updated March 4, 2021 5:04 PM

Nigeria has been a hotbed for bitcoin trading, at least among African nations. Now the West African country’s policymakers want to examine the digital coin to determine whether or not it has a place in the Nigerian economy, as per a report in Bloomberg . The concerns surfaced during a Senate session earlier this week in Abuja in which bitcoin took center stage.

African millennials are especially keen on bitcoin, as per the BBC , including in Lagos, where bitcoin is looked to not only as a form of investment but also as a means to remit payments cross-border. But it may soon be tougher for them to do so.

According to Deputy Senate President Ike Ekweremadu, the Senate Committee on Banking, Insurance and Other Financial Institutions will launch an investigation into “the viability of bitcoin as a form of investment, come up with recommendations on how to control its uses and trade.”

It’s to the dismay of some policymakers that bitcoin’s traded in Nigeria amid what Senator Benjamin Uwajumogu described in a motion as investors being “persuaded” of quick returns.

The Nigerian Senate is joining the chorus of the country’s central bank, the head of which told said in recent days to Bloomberg that trading bitcoin was akin to gambling, saying that the Central Bank of Nigeria couldn’t support such risky behavior.

Caution has been the tone of Nigerian policymakers since a year ago, when the central bank approached lenders amid the bitcoin price volatility and propensity for money laundering. They appear to be digital-coin agnostic, having cautioned  that bitcoin, Monero, Litecoin and other altcoins are not recognized as legal tender in the country and therefore any transactions are done so at the risk of the bank.

The CBN even approached lenders, requesting they steer clear of digital coins before “substantive regulation and/or decision” by policymakers. The time appears to have come, as the Senate plans to give its recommendations within a couple of weeks.

An Affinity for Bitcoin

Without formal regulation till now, traders have taken to forming their own clusters to implement standards for bitcoin trading. They had to do something, given their affinity for trading the digital coin coupled with the widespread fraud that had gripped the nation and took Nigerians for millions of dollars. This hit hard in a nation whose per-capita yearly income falls below $3,000.

So the traders reportedly took to  messaging app Telegram and created their own Know-Your-Customer (KYC) protocols, so to speak, in which interested parties are vetted, sometimes face-to-face, before joining the group, which has since ballooned to some 800 members.

Meanwhile, the fate of bitcoin trading in Nigeria is out of their hands.

Lagos image from Shutterstock.