Godwin Emefiele, the governor of the Central Bank of Nigeria, has warned that, “Cryptocurrency or bitcoin is like a gamble, and there is a need for everybody to be very careful.” Given the nature of the assets, “we cannot as a central bank give support”.
Nigerians are among the world’s more enthusiastic users of Bitcoin. According to peer-to-peer trading platform LocalBitcoin, trading in West Africa’s biggest economy went up 1,500% in 2017. The only country where growth was bigger was China, which outlawed exchanges in September 2017, forcing cryptocurrency users onto peer-to-peer platforms.
Nigerian growth has been driven by the weakening national currency, the naira, and increasing curiosity over the potential of cryptocurrencies. Much of the initial Bitcoin adoption in the country came from a Ponzi scheme, Mavrodi Mondial Moneybox (MMM), which became hugely popular in Nigeria. When the government started closing bank accounts associated with MMM, the scheme switched to Bitcoin payments, educating a generation of Nigerians in how to use cryptocurrency.
Emefiele would not be drawn on what measures the central bank would adopt, simply saying that at some point in the future they may, “make some very concrete pronouncements as to the direction (regulation might take)”. He added that they were looking into the issue and that he had asked his, “colleagues in the research and monetary-policy department to study the market.”
The International Picture
The comments by Emefiele are just the latest in a stream of warnings coming from central bankers and regulators worldwide. British Prime Minister Theresa May last week said that cryptocurrency regulation was “something that we do need to look at”, though her comments came more from a concern about “the way they are used, particularly by criminals’, rather than a concern for investors’ funds.
Meanwhile other countries are starting to make their positions clearer. Russia and South Korea have both recently announced their regulatory approaches to cryptocurrencies, allowing the industries to operate but with certain restrictions. The situation in many other countries, for instance India, is still uncertain.