CBN Regulation on Cryptocurrency
In the past few days, there has been uproar regarding the ban of cryptocurrency activities from the Central Bank of Nigeria through the users’ Banks they use to facilitate payments for crypto exchanges. This ban has caused a lot of disruption in the financial space as banks who had affiliations with cryptocurrency exchanges had to pull out from rendering their services to these exchanges, thereby halting incoming and outgoing transactions and making trading difficult for the exchange users.
Cryptocurrency has received a lot of acceptance in Nigeria and majority of the youths have made good use of this technology, with a lot of startups coming to facilitate the ease of transactions for the masses, which in this case creates employment for people and gives people a new source of income.
In a recent publication from Paxful, a peer-to-peer (P2P) exchange, showed that Nigeria was the second world’s largest and African biggest bitcoin market between the period of 2015-2020 with a volume of 60,215 btc amounting to $566,668,692 at the time of the publication. This goes to show the massive attention cryptocurrency has gotten from Nigeria and the moderate income it’s generating for those involved.
The ban in all its entirety isn’t in any way making things easy or safeguarding the masses from Fraud but rather disrupting their source of income and livelihood. The Central Bank has concerns about the illicit flow of cash and the ability of transactions to happen across borders without any regulation or taxes, whereas they’re leaving the part where trading, investing and exchanging of these currencies is a form of easing payments, wealth creation for the masses and other advantages it has gotten to offer.
“There’s no stopping crypto, [it’s] the future and we won’t let some old fools take our future from us, We’re Nigerians. Using the crypto is a way out of poverty for the youth” Says an anonymous user to Coindesk.
With the current situation of things, Nigerians have been able to find a way to deposit, withdraw and get their funds in their bank accounts while trading/exchanging cryptocurrencies. This is where P2P exchanges/networks come into play.
Peer to Peer(P2P) Networks the Ultimate Remedy
Since the ban from the Central Bank has mandated banks to stop all crypto related transactions and block accounts of cryptocurrency exchanges and individuals who engage in crypto trading with their bank accounts. Nigerians have found a way to trade their currencies without having the CBN on their neck, which brings us to the ultimate move of P2P.
The P2P mode of transaction has been on since the inception of transactions with cryptocurrencies in this part of the world but hasn’t gone mainstream, for years it has been run on WhatsApp and Telegram groups and by trust fellows between individual traders, sometimes it’s run by escrows.
As more and more people got interested in cryptocurrency the demand for exchanging and trading cryptocurrency became overwhelming as the informal form of handling exchanging couldn’t manage these many transactions. Exchanges began to spring up to facilitate P2P on a bigger scale and also help people sell their currencies.
A lot of P2P exchanges have been launched with thousands of users using these platforms to buy and sell cryptocurrency such as Paxful, Remitano, Roqqu and Binance.
This is the best way to go about trading your cryptocurrency at the moment.
How P2P Transactions Work
For transactions to take place in a P2P network, it involves 3 parties; the buyer, the seller and the escrow. These P2P exchanges act as escrows between buyers and sellers of cryptocurrency.
A buyer places a request on the platform and a seller is available to sell his coins. The buyer sends money to the Seller and the seller releases his coin that’s on the exchange. Everybody wins!
The escrow (exchanges) act as a trust system to ensure smooth transactions between the buyers and sellers.
Cryptocurrency has come to stay and the government cannot ban its usage, only regulations can be enforced to ensure there’s a way of monitoring exchanges and cryptocurrency companies.
Using Peer to Peer networks is the best way to combat this ban from the Central Bank of Nigeria. Users can trade their cryptocurrency without having to go through any exchange.