Nigeria: Cryptocurrency Should Be Regulated, Not Banned - Osinbajo

27 February 2021

Vice President Yemi Osinbajo yesterday said instead of adopting a policy that prohibits Cryptocurrency operations in the country, the government should develop a robust regulatory regime that is thoughtful and knowledge-based.

Urging Nigerians to act with knowledge and not fear, he said although he fully appreciates 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, their position should be the subject of further reflection.

Osinbajo stated this in a keynote address he delivered virtually at a one-day economic summit organized by the CBN, the Banker's Committee, and Vanguard Newspaper, themed, "Bankers' Initiative for Economic Growth".

He said, "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, the vice president 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.

"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."

On the task before national development and the public and private sector interventions, the vice president said, "In order to engender sustained economic growth, we must think in terms of scale.

"I am quite concerned when I hear that national interventions are classified as pilots involving sometimes no more than 1000 people. Given the size of our population, we cannot afford the luxury of pilot projects. We should design our interventions very carefully and then go big.

"It was quite puzzling to me when people said that our plan to build 300,000 houses under the ESP was too ambitious a target. After all, this amounts to 400 houses per local government yet many of our local governments are larger than some African countries who would not consider building 400 houses in one year as too onerous a task.

"The task of national development requires that we fire on all cylinders after all, at one stage, China was building 1.9m housing units per year over a number of years."

Speaking on the need to complement the efforts of the Federal Government in bridging the infrastructure gap, Osinbajo said the Buhari Administration has a track record of building roads, rail and power projects across the country.

"In spite of this commitment we are still very far away from meeting the full infrastructural needs of the economy," the vice president added, just as he called for improved support especially from the private sector in the operationalization of the Infrastructure Company (InfraCo).

"The President has now approved the establishment of InfraCo which will be a public-private partnership chaired by the CBN Governor to overcome our infrastructural deficits. I expect that this is a project that will excite the interest of financiers and bankers and I encourage you all to lend support to make it a success," Osinbajo noted.

The Vice President also emphasized the need for stakeholders to pay attention to human resource development as they scale up investments in the economy.

On the country's recovery from its second recession in four years, Prof. Osinbajo said policymakers, lawmakers and business leaders have cause to cheer the relatively good performance in the face of the negative impact of the COVID-19 pandemic, and attributed successes recorded to the early actions of President Buhari, "first in providing an initial stimulus and then, constituting the Economic Sustainability Committee and the Economic Sustainability Plan."

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.

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