The Vice-President of Nigeria, Yemi Osinbajo, has spoken in regards to the ongoing crypto ban imposed on financial institutions in Nigeria.
Speaking before an audience of the Vanguard Bankers Committee Summit, Prof. Osinbajo touched on the disruptive nature of blockchain and cryptocurrencies and urged the regulators to consider regulating the industry over simply banning.
“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.”
Osinbajo also touched on the disruptive nature of this technology by saying:
“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 is set to challenge traditional finance. The likes of Nexo finance offer instant loans using cryptocurrency as collateral.
#Osinbajo advises #CBN to put in place a thoughtful & knowledge based regulation, cautioned on the need to ensure that we are in a position to prevent any of the adverse side effects or even possible criminal acts that may arise as a consequence of adopting blockchain technology.— Central Bank of Nigeria (@cenbank) February 26, 2021
Speaking on the regulatory approach that should be considered in light of the growing interest in digital currencies globally, Osinbajo said:
“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.
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.”
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