Nigeria’s Vice President, Yemi Osinbajo, has kicked against the ban placed on the use of cryptocurrencies in Nigeria by the Central Bank of Nigeria (CBN).
Osinbajo, who spoke during the CBN Bankers Forum on Friday, stated that cryptocurrencies and blockchain technology will soon change the face of traditional banking as the world is gradually evolving and accepting the use of cryptos.
According to the Vice President, the apex bank should get ready for a shift in normal banking practices. He also added that rather than ban the use of cryptocurrencies in Nigeria, the CBN should initiate regulatory measures that will ensure the safe use of cryptocurrencies.
There is need for regulation and not prohibition of Cryptocurrency. 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.
I am sure you are all aware of the challenge that the traditional SWIFT system is facing from new systems like Ripple which is based on the blockchain distributed ledger technology with its own crypto tokens. There are, of course, a whole range of digital assets spawned daily from blockchain technology.
Decentralized finance, using smart contracts to create financial instruments, in place of central financial intermediaries such as banks or brokerages are 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.
Secondly, 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 d exciting developments we see the call for prudence & care in adopting them, but we must act with knowledge and not fear.
Recall that CBN Governor, Godwin Emefiele, about 24 hours ago, came under fire for stating that cryptocurrencies are generated from thin air.
He had also defended the ban on cryptocurrencies, saying that it is for the good of the Nigerians.