Confirmed NGN banks blocking account, what could be the outcome on the economy?

[CryptopreneurBrainboss]

Story trending around the web is that, the banks in Nigeria has started carrying out the directive of the Central Bank of nigeria to close all accounts found to be transacting with the cryptocurency industry. Evidence has been posted on twitter which includes, email sent by the banks, chat with customer care etc indicating that their account has been shutdown due to their involving with the not regulated industry.

Tuesday evening, James Chijindu went to a mall in Lagos to grab a meal and groceries. When it came time to pay, his Guaranty Trust Bank and First Bank debit cards were unresponsive. So he called a GTBank helpline and the message was clear; Chijindu’s account was closed in accordance with the directive of the Central Bank of Nigeria asking commercial banks to stop facilitating cryptocurrency transactions in Nigeria.

Well, I haven't seen any citizen affected physically, the evidences online are quite convincing which got me wondering if I'll be next since my account has crypto involvement all over due to my kind of business and I bank with both banks in the forefront of this exercise.  Now I'm trying to understand what this news will have on the Nigeria economy and the stock market understanding that this development must be targeted at certain companies or individuals opposing the government.

[Kittygalore]

I hope that it will not be the case for you @CryptopreneurBrainboss, you have a lot of transactions in cryptospace but I would bet on the fact you won't be affected because AFAIK about this issue, the only ones that gets a crackdown from are the businesses but not the individuals. The only problem with this is that you might be affected because government doesn't seem to discriminate businesses from individual when it comes to this kind of things, I hope that you can find an alternative to stay in cryptospace. In my opinion, this will hurt the economy because Nigeria is the leader when it comes to user growth followed by Australia and Spain. I will drop the link of the user growth for proof.

[Yogee]

....Now I'm trying to understand what this news will have on the Nigeria economy and the stock market understanding that this development must be targeted at certain companies.

The circular will increase the numbers of the unbanked. Traders will withdraw their money which means less liquidity for the banks. That also means they have less money to roll in their lending business or other investments [less income].

I don't know if news on crypto will also affect the stock market. Are you thinking traditional investors will lose faith on the government or will they trust it more as a result of the decision?

[Wenbing]

This is not a good news for our economy (Nigeria). I don't know why Nigeria always like to be the last to explore a beneficial technological trend such as the blockchain and the cryptocurrency.

I read in another Tweet on the 11th of February 2021 that the Senate has summon the governor of CBN, Godwin Amiefele, to answer some questions regarding the probable impact of cryptocurrencies to the economy and why the ban.

At a time like this when Kenya had provided regulatory guiedelines as regards crypto and express their support for it, Nigeria is still sleeping.

Hmm...

[BIT-BENDER]

I think this is against human rights, if someone has dealt with crypto-currency when there was no ban on it, and then there was a ban, their account can't be freezed on account that they dealt in crypto-currency before the ban, well am in Nigeria and I haven't heard of such complaint, but there is nothing too petty that Nigerian government can't do. I think such ban would affect many that has found self employment from crypto-currency in a country that job are scares, and people like me would had started to use crypto-currency as a way to see ourselves through life's problem and ends meet, it's just wicked for my government to take such stand.

[Hydrogen]

"Be your own bank." Is a common BTC motto and theme. One nigerian central banks have apparently decided to test.

The question is whether nigerian banks provide a valuable and irreplaceable resource to nigerians. Or whether their industry is non essential and can be replaced by progressive & emerging technologies.

If nigeria can replace every service central banks provide with crypto and localbitcoins. Their ban may not be very effective. It could even hurt their business due to negative publicity and public sentiment.

[zasad@]

The largest bank in Russia is Sberbank. The bank has one more popular system ЮMoney (formerly YandexMoney). They prohibit their clients from using to make cryptocurrency exchange transactions through their services. I recently changed cryptocurrency. Users now mark these payments as a regular transfer or transfer money to the account through an ATM. The gray market is growing, the laws don't work.

[dothebeats]

It's really fair. You can use your bank accounts to transfer funds to stocks brokers but you cannot use it to deal with cryptocurrencies. It's like they're dictating you on how and where to use your money. Although we know that it's only a matter of time before this crackdown happens, I feel that it's pretty sudden to impose it without the users knowing. When we knew that finally, the Africans are now catching up to crypto, Nigeria shuts it down and closed accounts with some deposits in it, too.

[aesma]

In my country having a bank account is basically mandatory, it's where you get your salary, where the government sends money if you have kids, etc. I don't think a bank could close your account like that. But just in case, I have several bank accounts, and my main one for the salary etc., is not used for crypto stuff.

[zanezane]

In my country having a bank account is basically mandatory, it's where you get your salary, where the government sends money if you have kids, etc. I don't think a bank could close your account like that. But just in case, I have several bank accounts, and my main one for the salary etc., is not used for crypto stuff.

That is a really bank dependent country, in my country, the only thing that you need when you get a job is to apply for government insurance and have them get a cut in your salary, and the rest can be taken OTC in the accounting department of the company. If your name is ever involved in something that the bank doesn't want to get involved in, they have the ability to freeze your account although closing will not be possible. They need the paper trail of your account so closing it might be a problem for them. What Nigeria does to its crypto businesses closing their accounts is a declaration that they do not want to do anything with cryptocurrency because they know the threat it poses of people becoming their own bank.

[Gozie51]

The activities of the bank and government will definitely affect the youths and the Nigerian economy. It is a wrong step by the Nigerian government.

It is going to push the economy backwards by at least 20 steps backward. The reason that it have huge set back is that institutions who would have wanted to transact or build products in Nigeria because of easy payment system with PayPal and bitcoin will not do so any more. Youths that are contributing by trading and making money that still goes back to do economy inform of capital projects, feeding of families, gift to friends and trying to introduce more friends, all will seize to happen. It is a wrong selfish move.

[Coyster]

The thing is that the Nigerian government has failed to provide resources or loans to small scale businesses, neither have they provided employment to their teeming youthful population, it looks somewhat like a misplaced priority just outrightly banning the use of crypto for no reason without addressing some of their pressing economic issues.

Having said that, Nigeria is also backward in technological advancement, neither do they have any plans in motion to launch something like a CBDC, what I'm saying is, it looks like the government is firing at the wrong target, as i really cannot understand what the Nigerian government stands to gain with this ban looking at how quickly crypto adoption is growing in their shores and could be another escape route for so many people to escape poverty, and by extension boister their economy.

[avikz]

That was expected to happen since Nigeria has decided to ban bitcoin and other crypto related activities! So people will have their funds frozen, they will face legal actions and some of them will end up in jail! That's how a failed government would want to do while they can't create any new opportunities. India will soon see similar things happening as Indian government has also decided to impose a blanket ban on crypto related activities. This is the mentality of dictatorship around the world.

It's sad to see that governments consider bitcoin as a threat rather than an opportunity. That's the problem with politicians and policy makers because they are under huge pressure from the banking lobby. It makes no sense but still it is happening! Some more regressive countries will soon be added to this list in 2021.

[davis196]

I wonder why countries like Nigeria and India are so anti-crypto?
What will be the benefit of banning all crypto activities in those countries?The crypto businesses located in Nigeria and India will move into other locations and hide their revenue,instead of paying taxes to the Nigerian and Indian governments.
Fighting scammers/criminal is the most popular reason for having strict anti-crypto rules,but it is proven that cryptocurrency bans can't stop crypto scams.
Legalization and liberalization of the crypto industry and all fintech is the way to go.

[Oshosondy]

I don't know if news on crypto will also affect the stock market. Are you thinking traditional investors will lose faith on the government or will they trust it more as a result of the decision?

The reason for the ban is the lies that cryptocurrencies are used in illicit deals and that transactions can not be traced, not because of any other reason. If there are other reasons it was declared banned, maybe further shady on the government side. Stocks are not affected. I do not think investors will lose faith in the governments but crypto dealings will still be very active. As Nigeria is so active in crypto dealings. After central bank of Nigeria declared it illegal, bitcoin and altcoins at the point saw a rally while bitcoin even hit all time high.

[Igebotz]

Now I'm trying to understand what this news will have on the Nigeria economy and the stock market understanding that this development must be targeted at certain companies or individuals opposing the government.

At this point, the Nigeria government are scared of the massive unity among her youths who's with the recent agitations could unseat any government. So they feel they've been sponsored and gets their donations via bitcoin which is quite anonymous; on this note, they decided to limit banks from involving in any crypto transaction since it's the primary source of buying a Bitcoin. Looking at the economy impart of the ongoing closure of bank accounts involved in crypto activities as directed by the CBN I think the economy sustainable development of any bank depends on their customer's investments.
e.g

If bank A had 2million customers paying monthly ATM maintenance fees of N54.2k
That's 2m x N54.5 = N108,400.000m

Now if the same bank should lose 500 customers due to the CBN regulations ;

1.5m X N54.2 = N81,300.000m

That's some huge percentage % drop right here which would eventually affect the stock markets also and the country GDP.

Nigeria government should always look at the economy, social impart before taking an acidic decision, everything shouldn't be seen as political.

[magneto]

Another dumb move from a central bank.

The ban will be completely non-enforceable and will simply create more alternative trading platforms other than regulated ones.

This is precisely what happened with the RBI's ban on cryptos. All they did was wipe out a significant portion of the regulated crypto industry, whilst driving people to P2P platforms such as LBC. This will be no different.

[VanDeinsberg12]

I wonder why countries like Nigeria and India are so anti-crypto?
What will be the benefit of banning all crypto activities in those countries?The crypto businesses located in Nigeria and India will move into other locations and hide their revenue,instead of paying taxes to the Nigerian and Indian governments.
Fighting scammers/criminal is the most popular reason for having strict anti-crypto rules,but it is proven that cryptocurrency bans can't stop crypto scams.
Legalization and liberalization of the crypto industry and all fintech is the way to go.

Maybe they think crypto could be a double edged sword more specifically for developing country economy where the money could escape from the countries' economy easily through the use of crypto but I don't honestly think that's enough justification to limit their citizen of their own right to own asset like crypto.
Sometimes country take a step that doesn't make sense at all it's confusing.

[stompix]

If bank A had 2million customers paying monthly ATM maintenance fees of N54.2k
That's 2m x N54.5 = N108,400.000m

Now if the same bank should lose 500 customers due to the CBN regulations ;

That's like people from the tobacco industry claiming they bring up 10% of the GDP, and if people stop smoking will they burn their money not spend on cigarettes or spend them on something else? How many Nigerians had bank accounts only for transacting cryptos? And don't come with the million numbers cause you all know it's not true.

Well, I haven't seen any citizen affected physically, the evidences online are quite convincing which got me wondering if I'll be next since my account has crypto involvement all over due to my kind of business and I bank with both banks in the forefront of this exercise.  Now I'm trying to understand what this news will have on the Nigeria economy and the stock market understanding that this development must be targeted at certain companies or individuals opposing the government.

Let me be the bearer of bad news, despite all that cultists are shouting every second.

If (!) and here is the big IF,  they want to shut down all trading, including p2p done via banks they can do this in a matter of days.
People have the wrong impression that by sending individual payments via banks they can obfuscate what that payment is about, it makes sense the first moment but not so much the second one.

I've traded for a while on LB, I was making like 100+ transactions to different people a month, guess how many I've made since I quit? 1 or two a year!
Banks can simply run a query on their database to see who does 50+ a month to different people (not family, not owning a business, not declaring income) and in a few seconds, they have all the names of individuals that might deal in crypto and as a bonus other suspicious activities.
Check if those accounts interlink themselves, check the sums, check the (whatever IRS version you have for individual revenues)  and here you have them, a matter of a few days of work, and you probably have identified 90% of the traders in the country that use banks and with a click annihilate them.

There is no hiding in a centralized system with an activity that stands out this much!
If they want (Again, big IF) to enforce and totally cripple trading they can, the only thing they can't stop would be face2face transactions, but that's like returning to the stone age, and the risk of getting acquainted with an undercover cop is the cherry on top.

The way out of this is not finding ways to avoid the ban, trying to weasel the way out but change what is wrong in the first place, the legislation.
If you allow them an abuse the next one will be just around the corner.

[el kaka22]

If (!) and here is the big IF,  they want to shut down all trading, including p2p done via banks they can do this in a matter of days.
People have the wrong impression that by sending individual payments via banks they can obfuscate what that payment is about, it makes sense the first moment but not so much the second one.

I've traded for a while on LB, I was making like 100+ transactions to different people a month, guess how many I've made since I quit? 1 or two a year!
Banks can simply run a query on their database to see who does 50+ a month to different people (not family, not owning a business, not declaring income) and in a few seconds, they have all the names of individuals that might deal in crypto and as a bonus other suspicious activities.
Check if those accounts interlink themselves, check the sums, check the (whatever IRS version you have for individual revenues)  and here you have them, a matter of a few days of work, and you probably have identified 90% of the traders in the country that use banks and with a click annihilate them.

There is no hiding in a centralized system with an activity that stands out this much!
If they want (Again, big IF) to enforce and totally cripple trading they can, the only thing they can't stop would be face2face transactions, but that's like returning to the stone age, and the risk of getting acquainted with an undercover cop is the cherry on top.

Unfortunately the true fact is that if banks are not allowing anything like this, it is all gone, and you have to accept that it will be dead in a very quick matter. However reality is that there are banks that blocks accounts yet there are banks that not only support it, but also invest into crypto as well.

So, we can't say that every bank has an approach, some banks are looking at it like it is a good thing and some of them are looking at it like it is a bad thing, there is really no official situation just yet.

I personally think that the best way to go would be helping banks realize what they are missing out, all crypto people that uses those banks could get their money out of that bank and move to another bank and as a reason you could write "not friendly towards cryptos" and that bank may realize that they have done a mistake that way because all banks care about money in their accounts.