By: TOBI ADETUNJI
A Financial Expert and an Investment Relation Professional has extolled the Federal government of Nigeria on the proposed stablecoin – cNGN, set to be launched of 27th February, 2024.
They also highlighted the numerous economic benefits deliverable from the proposed virtual asset.
Dr. Bunmi Bewaji, an expert in taxation, who spoke to Techeconomy on the proposed virtual asset – cNGN- noted that although the previous administration banned cryptocurrency transactions by banks which drove people away from the open market, virtual assets cannot be ignored.
According to the University of Leeds Alumni;
“It is a good thing. Although, the policy shift is riddle with some inconsistencies, we cannot ignore the virtual assets. Because, an outright ban as it was done by the previous administration drives people away from the open market to a kind of darkroom trading. The opacity of that operation could lead to it been used for criminality, Terror financing and all of that, so its good thing to bring in the much- needed transparency’.
He also noted that the stable coin will allow the Central Bank of Nigeria to set the rules, monitor the markets and address infractions and abuses that may emanates from Virtual Asset in the country, whilst creating an avenue for the government to generate more revenue.
He however, charged the Apex Bank to be consistent in its policy making. “Only yesterday, the CBN placed an outright ban on cryptocurrency.
And people need to go to the bank and fill a form saying I do not hold any asset in cryptocurrency. But here you are now saying CBN is launching E-naira and then now the stable coin.
Also in his reaction to the development, Afolabi Oriyomi, the country relations and investment professional at AFC, noted that just like the country is ranked 6th globally in cryptocurrency trading, the stablecoin can boost Nigeria enhance the derive towards financial inclusion and international accessibility.
He noted that Nigeria’s current financial inclusion at around 74%, far from the 95% target by 2024, as well as the expensive fees of about 8% associated with traditional international transactions (cross-border payments) and the Naira depreciation against the developed currencies, the Central Bank of Nigeria’s (CBN) move towards adopting stable coins, specifically the cNGN, is a positive step to address these issues.
He said, Nigeria is ranked 6th globally in cryptocurrency market transactions, amounting to $400 million. Introducing a stable coin could channel this volume into the formal financial system.
Additionally, creating a stable coin would enhance international accessibility to the Naira, aligning with the global trend of increasing demand for digital assets.
He however, noted that its success will depend mainly on a well-designed regulatory framework, responsible implementation by both public and private actors, as well as practical financial literacy programs
Recall that the eNaira was launched in October 2021 to counter the growing influence of cryptocurrencies. It was launched in the same month that the CBN prohibited banks from providing financial services to cryptocurrency businesses; they were not allowed to operate an account in banks and other financial institutions.
The central bank also ordered the closure of all bank accounts owned by cryptocurrency businesses, effectively crippling the operations of crypto exchanges.
The eNaira began its life with a public perception that it was created to make redundant an industry that many have come to embrace. Also, there was an industry perception that the creation of the eNaira did not take into consideration the input of industry stakeholders.
The CBN contracted a foreign company, Bitt Inc, to develop the blockchain eNaira was built on. In fairness, the company had an antecedent of building CBDC.
In 2019, the Barbados-based fintech firm signed a contract with the Eastern Caribbean Central Bank to test a blockchain based CBDC inside the Eastern Caribbean Currency Union. But their expertise notwithstanding, many Nigerians felt it was a slight on the Nigerian tech ecosystem to go for a foreign company.
Apart from that, some experts argued that the contract violated Executive Order No 5 signed into law in February 2018 by the then president Muhammadu Buhari.
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