(PDF) Investigation of the CBN Cryptocurrency Ban Policy in Nigeria and Public Perception

CHAPTER ONE

INTRODUCTION

Background of the study

Historically, the general market and most financial markets have advanced significantly. In this regard, the methods of exchanging goods have also evolved and adapted to market needs, with the aim of making business transactions as easy as possible. The assets used to conduct an exchange of goods are called foreign exchange. Most economists describe money as a form of exchange, capital and savings. According to us, money is an exchange tool, but we both agree to accept it. The seller agrees to accept cash in exchange for the goods; accepting employees to receive money for their work. As part of the account, money provides a simple tool to identify and transfer value. Money is like a savings account that allows us to save the results of our business with the right tools. In other words, money allows us to maintain the value of a work week with less money than a long, long week. If not, how do we pay for it later? From the days of commerce to commerce, iron ore and coins, gold and silver, the development of modern systems and systems and the development of globalization, such as the production of cryptocurrency known as bitcoin and ethereum, are still developing for centuries. . Each type of coin has a significant role to play in each transaction. However, as society as a whole and the market as a whole developed, advanced means of exchange were needed. In this regard, the introduction of cryptocurrencies has transformed the international payment system to an unimaginable level a few years ago. Digital currency is a digital or real currency that uses encryption for security. So cryptocurrencies are hard to lie for security reasons. The type that distinguishes a coin and is clearly the most attractive is its type; it is not provided by the central authority, thus making it vulnerable to interference or government fraud. Cryptocurrency has its advantages and disadvantages. The great advantage of using cryptography is that it helps to transfer money between the two parties through compensation; This exchange facilitates the use of public and private keys for security purposes. These transactions are performed at low operating costs, allowing users to avoid high fees at most banks through online transactions. The risk of termination is a major threat to the cryptocurrency payment system. For example, in the history of Bitcoin, companies have been the victims of more than 40 frauds, including some costing more than a million dollars. However, despite the risks, many regulators continue to look at cryptocurrencies as they are expected to make money, drive change, and be simpler than carbide, ‘ and they have lost the influence of the central bank and the government. Approximately 856 cryptocurrencies. According to Gandal and Halaburda (2016), the competitive cryptocurrency market can be explored for a number of interesting reasons. At the core, it is a new market, with more and more competing players competing. It is a good laboratory with well-defined and high-quality data on price and time, market capitalization. Bitcoin leads a long list of cryptocurrencies, followed by Ethereum and Ripple, which have billions of dollars in numbers.

In recognition of all these significant benefits of digital currency, on 5 February 2021, the Central Bank of Nigeria (CBN) has issued a policy informing financial institutions not to enter or manage cryptocurrency payments . The circular instructed banks to close all bank accounts associated with the cryptocurrency trading platform. However, CBN stated that no new restrictions were placed on cryptocurrencies, as all national banks were banned from using, storing, selling and / or selling cryptocurrencies on a circular by the CBN on 12 January 2017.

Statement of the problem

The happenings that accompanied the early part of the month of February after the experience of the EndSARs protest in Nigeria was the public announcement by the Central bank of Nigeria on the policy to Ban cryptocurrency trading in the country. The Nigerian crypto community received a shocker when CBN released a circular warning financial institutions to desist from dealing or facilitating payments for cryptocurrency exchanges. The CBN sent the letter to local financial institutions on Friday 5th Feb. 2021, ordering them to shut down all bank accounts associated with cryptocurrency trading platforms. In response to the letter, crypto-trading platform Binance and local electronic payment apps like Bundle halted deposits. It also states that cryptocurrencies are issued by “unregulated and unlicensed” entities, and that crypto assets are volatile speculative assets that can be a danger to Nigerian users. Many young Nigerians who engage in crypto are obviously unhappy with such a directive knowing very well, the influence the apex bank has on Africa’s fast-growing financial ecosystem. This has made the many of Nigerians to take to the social media tweets with tags like “No To Crypto Ban” “Why Restrict Crypto Transx” “No Way To This Restriction” We Need Cryptos” “In Cryptos We Trust” and several other tweets. Some crypto pundits also believe the approach taken by the CBN was rather discouraging to the growing industry. This directive by CBN has already strengthened fears among a growing number of Nigerian users that include millennial and small business operators that use such digital assets for payments and hedge against fiat inflation. This study is carried out to investigate the public perception on the Cryptocurrency ban policy by the CBN in Nigeria.

Objective of the study

The primary aim of this study is to find out the public perception of the CBN ban policy on cryptocurrency trade in Nigeria. Specifically, the study seeks to:

Research Questions

The following research questions guides this study

What are the perceptions of Nigerians towards Cryptocurrency Ban Policy by the CBN?
Is there a significant difference in the public perception of Nigerians towards the Cryptocurrency ban policy?

Research Hypothesis

The following hypothesis was tested in this study:

H0: There is no positive public perception of Cryptocurrency Ban Policy by Nigerians.

HA: There is a positive public perception of Cryptocurrency Ban Policy by Nigerians.

Significance of the study

This review will help decision makers adjust and formulate laws and policies to meet the needs of society and create a good environment between government and society. This study will inform the public about the validity of cryptocurrency prevention policies, which are at odds with their views and opinions. This study complements existing literature on the subject and will be a source of information for students, scholars and researchers who may be conducting further research on this topic or related section.

Scope and Limitation of the study

This study is limited to investigating the public perception of Nigerians towards the Cryptocurrency Ban Policy by the CBN. The study will examine residents from Lagos state, Nigeria.

The major constraints the researcher encountered while carrying out this research work were insufficient finance, inadequate time and unavailability of relevant materials in this research domain.

Definition of terms

Public: a group of people having common interests or characteristics specifically

Perception: the way in which something is regarded, understood, or interpreted.

Cryptocurrency: a digital currency that can be used to buy goods and services, but uses an online ledger with strong cryptography to secure online transactions.

Ban: a formal or informal prohibition of something. Bans are formed for the prohibition of activities within a certain political territory.

Policy: a policy is a deliberate system of principles to guide decisions and achieve rational outcomes. A policy is a statement of intent, and is implemented as a procedure or protocol.