The Central Bank of Nigeria (CBN) has acknowledged that the emergence of cryptocurrencies has introduced innovations into the financial sector, an aspect that has forced most institutions to change their mode of operations.
CBN governor Godwin Emefiele noted that despite the existing risks associated with cryptocurrencies and fintech, they come with benefits such as financial inclusion driving growth and lowering poverty levels, Daily Nigeria reported on July 15.
In this line, the governor noted that financial institutions must rethink their approach to regulating the emerging sector.
“The evolution of FinTechs, Cryptocurrencies, Digital Payments, Artificial Intelligence and Machine Learning have changed the functioning of the financial and banking sectors, both globally and domestically. Therefore, the urgent call for the need to rethink financial system regulation, supervision and monetary policy implementation,’’ he said.
Nigeria’s focus on crypto regulation
According to Emefiele, based on the benefits of the crypto sector, the country is tasked with finding a new approach to adapting to monetary policies. The governor confirmed that the bank’s Monetary Policy Committee (MPC) would determine a new policy approach to improving the country’s monetary framework and offer a new direction.
Furthermore, Emefiele challenged MPC members to be conversant with the digitized monetary policy objectives, targets and tools.
“In order to ensure the relevance of monetary policy and the role of monetary authorities in the new digital world, MPC members must embrace themselves with advanced level understanding of the interplay of digitalisation with monetary policy objectives, targets and tools,” he added.
Rising crypto investors
In general, Nigerian authorities have been forced to look into the crypto sector, considering a majority of residents own different assets.
As reported by Finbold, crypto exchange KuCoin revealed that about 33.4 million Nigerians, accounting for 35% of the country’s population between the ages of 18 and 60, were either current owners of crypto or have partaken in crypto trading as of April.
With the local currency depreciating, most Nigerians have turned to cryptocurrencies as a store of value and means to remit payments.
Following the growth of cryptocurrencies, CBN has also increased crackdowns on unregulated crypto service providers. For instance, at some point, the bank imposed fines totalling ₦800 million ($1.9 million) on four banks for allegedly facilitating cryptocurrency transactions in 2021.