Just in: Osinbajo tells CBN to regulate, not ban cryptocurrency

Vice President Yemi Osinbajo has called in the Central Bank of Nigeria, CBN to not ban cryptocurrency and instead seek ways to regulate the technology.

Prof. Osinbajo stated this while speaking about the revolution of cryptocurrency at the Bankers Committee Vanguard on Friday.

Recall that the CBN had on February 5, issued a directive prohibiting banks and financial institutions from transacting in cryptocurrency transactions.

However, wading in on the cryptocurrency debate, Osinbajo said the Blockchain technology will at some point rival traditional banking due to some of its benefits, hence Nigeria needs to be prepared.

He said, “On the very topical issue of blockchain technology, digital assets, and cryptocurrencies let me say two things.

“First is that there is no question that blockchain technology generally and cryptocurrencies, 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, remittance systems are being challenged. Blockchain technology will provide far cheaper options for the kind of fees being paid today for cross-border transfers.

“Decentralized finance, using smart contracts to create financial instruments, in place of central financial intermediaries such as banks or brokerages is set to challenge traditional finance. The likes of Nexo finance offer instant loans using cryptocurrency as collateral.

“Some reserve banks are investigating, issuing their own digital currencies. Clearly the future of money and finance, 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 efficiency and progress.

Osinbajo further added that the CBN’s directive is due to the tendency of cryptocurrency being used to facilitate corrupt practices but the agency should reflect on its direction and seek regulation.

“I fully appreciate the strong position of the CBN, SEC, and some of the anti-corruption agencies on the possible abuses of cryptocurrencies and their other well-articulated concerns, but I believe that their position should be the subject of further reflection.

“There is a role for regulation here. And it is in the place of both our monetary authorities and SEC to provide a robust regulatory regime that addresses these serious concerns without killing the goose that might lay the golden eggs. So it 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, but we must act with knowledge and not fear,” he said.