Rather than adopt a policy that prohibits cryptocurrency operations in the Nigerian banking sector, “we must act with knowledge and not fear” and develop a robust regulatory regime that is thoughtful and knowledge-based, according to Vice President Yemi Osinbajo, SAN.
Prof. Osinbajo stated this in a keynote address delivered virtually at a one-day economic summit organized by the Central Bank of Nigeria, the Banker’s Committee, and the Vanguard Newspaper, themed “Bankers’ Initiative for Economic Growth”.
According to the Vice President, “I fully appreciate the strong position of the CBN, Securities and Exchange Commission (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.”
Emphasizing the need for monetary authorities to rethink their stand on cryptocurrencies, Prof. Osinbajo said “there is no question that blockchain technology generally and cryptocurrencies, in particular, will in the coming years challenge traditional banking, including reserve (Central) 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.”
His words: “Already remittance systems are being challenged. Blockchain technology will provide far cheaper options to the kind of fees being paid today for cross-border transfers. 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 block-chain 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. Some reserve banks are investigating issuing their own digital currencies.”
Participants at the forum include the Governor of Lagos State, Mr Babajide Sanwo-Olu; Governor of the Central Bank of Nigeria, Mr Godwin Emefiele; representatives of, the Minister of Finance, Budget and National Planning; the Founder of Vanguard Newspaper, several banking executives, among others.