Nigeria needs to regulate cryptocurrencies, not ban them -vice president

By Chijioke Ohuocha
ABUJA, Feb 26 (Reuters) - Nigeria's central bank and
securities regulator need to find ways to regulate
cryptocurrencies rather than prohibiting their use, Vice
President Yemi Osinbajo said on Friday, urging them to come up
with a regime that would support growth and innovation.
The central bank this month barred banks and financial
institutions from dealing in or facilitating transactions in
cryptocurrencies such as bitcoin, warning that banks which fail
to act could face "severe regulatory sanctions". The Securities and Exchange Commission (SEC) has meanwhile
sought to regulate cryptocurrency investments on the grounds
that they qualify as securities transactions.
Both regulators said they had identified certain risks
within the digital asset sector, without explaining further.
The central bank has argued that cryptocurrencies, which are
unregulated and not legal tender, are risky for the user.
"I fully appreciate the position of the central bank, the
Securities and Exchange Commission and ... the possible abuses
of cryptocurrencies," the Vice President Osinbajo said.
"There's a role for regulation here and it is the place of
our monetary authorities and SEC to provide a robust regulatory
regime that addresses these serious concerns."
But addressing top bankers at an online meeting also
attended by central bank governor Godwin Emefiele, Osinbajo also
said disruption creates efficiency and progress, as has been
seen in other sectors.
"Cryptocurrencies in the coming years will challenge
traditional banking, including reserve banking, in ways that we
cannot yet imagine, so we need to be prepared for that seismic
shift," he added.
Use of bitcoin, the original and biggest cryptocurrency, has
boomed in Nigeria in recent years, especially among small
businesses, as the weakening naira currency makes it difficult
to get the U.S. dollars needed to import goods or
services. Bitcoin BTC=BTSP has soared over 60% this year, hitting an
all-time high of $58,354 this month as mainstream companies such
as Tesla Inc TSLA.O and Mastercard Inc MA.N have embraced
cryptocurrencies.
Digital assets under management across exchange-traded
products doubled this month to a record $43.9 billion,
researcher CryptoCompare said on Friday, underscoring soaring
interest in securities that track digital currencies.
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Many central banks are considering issuing their own digital
currencies although Nigeria's has not said it is among them. The
International Monetary Fund said on Thursday that policymakers
should aim to harness the benefits of digital currencies while
addressing their risks and legal challenges.