Nigerian Central Bank Considers Digital Naira Amidst Bitcoin Crackdown

Many countries currently have central bank digital currencies (CBDCs) programs underway, in an indicator of increasing global adoption of these digital assets. The latest entrant to make an appearance in a field that’s gaining a significant amount of attention is Nigeria. It was reported by a local news outlet that the Central Bank of Nigeria (CBN) plans to launch a digital counterpart of its Nigerian Naira. Godwin Emefiele, the Governor for the Nigerian Central Bank, disclosed these plans on Wednesday at the 279th monetary policy rate (MPR) rating. In February, the central bank of the West African giant had issued a directive that instructed payment processors and banks in the country to halt their crypto services to clients.

Emefiele said that the central bank in the country is committed to making the digital Naira a reality. As far as the bank’s recent directive regarding outlawing of cryptocurrencies is concerned, the CBN boss did try to justify it and linked the tweets by Elon Musk to the recent crash that had occurred in the digital currencies market. The Nigerian banker also shed some light on the reasons behind the decision of the bank. He said that they had conducted a thorough investigation and discovered that a substantial number of people were getting involved with cryptocurrencies, which they don’t want. 

He went on to say that while some cryptocurrencies were legitimate, there was also a significant number that was illegitimate. A number of Nigerian crypto professionals believe that this is a good step. Bitcoin exchange Koinwa’s founder, Hakeen Dsu said that things could get better in the Nigerian crypto sector. He stated that a digital dollar was also being considered by the US, but it is a fact that none of them can replace Bitcoin. Now that a digital Naira is also being considered by CBN, there was a strong chance of the ban being reversed. 

Responsible for overseeing strategic partnerships at Threshold, a crypto management firm, Chike Okonwo said that Bitcoin was going to stay in Nigeria. He believes that if it is done the right way, a digital Naira could work wonders for the industry as a whole. There are also some people who believe that the introduction of a digital Naira in the country would be helpful in ending the cycle of corruption. This is due to the fact that the CBN will be able to keep track of it wherever it goes and this will help in eliminating state corruption. 

Bitcoin had begun to appeal to Nigerians because of the stringent forex policies that the country’s central bank had adopted a few years ago. Sending and receiving payments from abroad had become immensely difficult for Nigerians. Plus, the declining confidence in the fiat currency of the country i.e. Naira, had also made it easier for the young population to adopt digital currencies like Bitcoin and Ether. Since then, the West African nation has seen tremendous growth in cryptocurrency adoption. Almost 1.1 million crypto trades were conducted in 2020 on the crypto exchange Paxful.