Lifting of virtual currency ban
The Central Bank of Nigeria has lifted the ban on the provision of crypto-asset (virtual currency) related services in a circular issued on the 18th. Nigeria has the largest population and gross domestic product (GDP) in Africa.
Since February 2021, the Central Bank of Nigeria has prohibited all financial institutions in the country from providing bank account services to virtual currency exchanges and individual virtual currency investors. It appears that the ban has been lifted on the premise of KYC (identification verification).
The Central Bank of Nigeria stated that, “Due to the increasing global demand for virtual currencies and the increasing number of implementation cases, it is no longer appropriate to maintain the ban.” After the ban was imposed, the country’s crypto community strongly opposed it, seeing it as a threat to economic freedom and innovation.
On the other hand, looking at current global trends, it is necessary to regulate the activities of virtual currency service providers (VASPs), and the government has once again provided guidelines.
For example, financial institutions should conduct appropriate customer identification (KYC) and due diligence (risk examination) regarding virtual currency transactions, monitor for suspicious or illegal activities, and report any relevant activity to authorities. is required.
As long as they comply with these guidelines, banks and other financial institutions can provide services to virtual currency exchanges and their customers. It also stipulates that violations of the guidelines will result in serious sanctions, including license revocation, fines, and criminal prosecution.
India is also one of the countries that has changed its policy as the regulatory environment for virtual currencies has begun to improve internationally.
At one time, there was a possibility that India would introduce a bill to ban virtual currencies, but the country changed its direction to align itself with the international community. An Indian government official said it would be extremely difficult for a single country to ban cryptocurrencies.
India also announced that it would focus on supporting Web3 startup companies, saying that Web3 is the future of the Internet.
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What is Web3?
The current centralized web is defined as Web2, and refers to an attempt to realize a decentralized network using blockchain, etc. Typical features include use cases for decentralized networks such as blockchain, such as accessing dApps using virtual currency wallets.
▶️Virtual currency glossary
Cryptocurrency trading flourishes due to the decline in legal currencies
Nigeria remains at the top of Chainalysis’ ranking of countries where cryptocurrencies are used at the grassroots level. In 2023, it was in second place after India.
The reason for this is that the sharp fall in the value of the fiat currency Naira has led to alternative assets such as gold and Bitcoin (BTC) becoming places of refuge.
According to Chainalysis, Nigeria’s virtual currency trading volume increased by 9% from the previous year to approximately 8.8 trillion yen ($56.7 billion) from July 2022 to June 2023. In particular, the Naira depreciated significantly from June to July 2023, and interest in Bitcoin and stable coins increased.
Peer-to-peer (P2P) transactions are also popular in Nigeria, and it was ranked number one in the world by Chainalysis. Chainalysis estimates what percentage of a country’s residents have invested in cryptocurrencies, taking into account the country’s purchasing power parity and number of internet users.
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