Lessons from some of the worst bitcoin scams to have hit the African continent — scams that have slowed the adoption rate for bitcoin in Africa.
Today, the Senate of Nigeria —which has similar legislative powers to the U.S. Senate —
“Cryptocurrency has become a worldwide transaction of which you cannot even identify who owns what. The technology is so strong that I don’t see the kind of regulation that we can do. Bitcoin has made our currency almost useless or valueless." - Senator Sani Musa
— The Nigerian Senate (@NGRSenate) February 11, 2021
">shared notes from its daily proceedings. Among the presentations of bills and reports was discussion of a recent reminder from the Central Bank of Nigeria (CBN) that financial institutions are prohibited from facilitating any accounts transacting with cryptocurrency exchanges.
During that discussion, a Nigerian official made a concession that many Bitcoiners champion, but few governmental representatives have ever made. Senator Sani Mohammad Musa announced that Bitcoin has all but superseded Nigeria’s fiat system.
https://twitter.com/ngrsenate/status/1359835689513271301?s=21
Nigerians Seek Plan B
The reminder came after local groups aiding those protesting the actions of a controversial police unit, known as SARS, were cut off from institutional financial services and began leveraging Bitcoin as a sovereign alternative.
“Over the course of the past week, we’ve had restrictions placed on our bank accounts and many people who have donated to us or received donations from us have also alleged and complained of restrictions placed on their accounts by certain banks,” Dami Odufuwa, an organizer of one such aid group, told Bitcoin Magazine in October 2020. “This is what forced us to move to decentralized payment platforms and only accept donations in bitcoin using BTCPay.”
Some in Nigeria believe that the recent reminder of the cryptocurrency prohibition was motivated by these protest and aid groups switching to alternatives like bitcoin.
“There’s a direct line that can be drawn from the EndSARS protests — which carried on partly with funding from cryptocurrency even though CBN restricted several accounts — to these latest regulations,” Joachim MacEbon, a senior analyst at SBM Intelligence in Lagos, told Bloomberg. “This latest instruction will end up making the case for cryptocurrency adoption better than any other argument. One promises freedom, while the status quo only reinforces restrictions.”
As Nigerian Bitcoin Core Contributor Tim Akinbo explained on Twitter, Bitcoin is a peer-to-peer technology that cannot be shutdown by third parties like central banks. Such regulations may make it more difficult for people in Nigeria to use Bitcoin, but they cannot stop them altogether.
According to Coin Dance, bitcoin trading volume on peer-to-peer exchange LocalBitcoins has risen noticeably so far this month.
An Unprecedented Acknowledgement
Musa’s concession that Bitcoin is unregulatable and has left the Nigerian naira “valueless” was met with mixed reactions from colleagues.
Senator Abiodun Christine Olujimi similarly acknowledged cryptocurrency’s sovereignty and emphasized the opportunity to foster development but appeared to call for regulation all the same.
Ultimately, the Nigerian Senate resolved to mandate its banking committee to deliberate with CBN and report on the “opportunities and threats” of cryptocurrencies in the next two weeks. It seems unlikely that Musa’s candid realization that the government will lose (indeed, has already lost) any battle to reign in Bitcoin will dominate that report. But his acknowledgment, coming from the senate floor in a country that is seeing its citizens leverage Bitcoin to operate outside of financial restrictions, is still a remarkable one.