Will cryptocurrency ever be considered an asset for loans in Nigeria?

[Coin_info]

 Hello friends, do you think Nigerian banks and other related bodies will ever consider categorizing Cryptocurrency as an asset that will make people eligible for loans? I read online that that is a move been considered already by countries like the United States.


https://www.investopedia.com/federal-regulator-opens-doors-to-crypto-in-mortgage-applications-11761381

[Shadiq]

It is difficult to put this into practical terms. It is nothing but a risky thing for banks to consider crypto assets as collateral by recognizing cryptocurrency as an asset. Because we all know how volatile crypto assets are and we have no idea about their future value. If you want to clearly mention Bitcoin, then maybe it will be less risky for banks. If you present shitcoins as crypto assets, then banks may not want to accept them, because they have no future.

Suppose, when you are taking a loan, your crypto (shitcoin or memecoin) asset is worth $100k, but since crypto assets are not stable, there is a high possibility of its value decreasing. So when you fail to repay the loan or refuse, banks may have to count the losses. They may not take such a harmful step very easily. Maybe they can recognize Bitcoin or some altcoins as assets and consider them as collateral and give you a loan. Because although Bitcoin is volatile, it is bullish in the long term.

[DubemIfedigbo001]

Hello friends, do you think Nigerian banks and other related bodies will ever consider categorizing Cryptocurrency as an asset that will make people eligible for loans? I read online that that is a move been considered already by countries like the United States.


https://www.investopedia.com/federal-regulator-opens-doors-to-crypto-in-mortgage-applications-11761381

They would start by giving banks the free liberty to allow users transact with cryptocurrency directly first before considering using it as a collateral. The CBN has not revoked its stand on direct transaction with cryptocurrency with banks and any account linked to that is still a high target for ban.

So, first things first, acceptability before thinking of using it as collateral. Waiting for Nigeria to approve this would seem to me as hopeless since this administration literally has no fancy of cryptocurrency and its economic benefits. Rather, they enjoy getting loans from western countries to degrade the economy instead of boosting it.

[DPHOR]

But wait a moment!
Why would someone go take loan from bank and want to present their digital currency to Bank?
Well, I see no sense of having Bitcoin and you want to hold it back and borrow money, why not just convert few sat and do your things thank having to go through stress to loan money in the bank, besides Nigeria bank like I know can never accept Bitcoin as a collateral for someone to borrow money from bank after knowing how volatile the crypto currency market be. Do you also realize that any amount you are loan from bank are generally people funds that was stored in the bank, when the needs arises they go make use of the money than just giving out huge some of money and expect bank to have a volatile asset as their collateral this won't be possible.

[Ambatman]

Hello friends, do you think Nigerian banks and other related bodies will ever consider categorizing Cryptocurrency as an asset that will make people eligible for loans? I read online that that is a move been considered already by countries like the United States.


https://www.investopedia.com/federal-regulator-opens-doors-to-crypto-in-mortgage-applications-11761381

Yes it's possible as can be seen already, the US are planning on testing that venture.
The banks are definitely going to account for volatility
So even if your Bitcoin for example is worth 10 million Naira
The bank are going to take the value lower to account for volatility.


Besides if such option are opened for say Bitcoin, it's rate of downtrend Would reduce and uptrend would increase.

But Our country isn't anyway near there since our bank is even ban from dealing with cryptocurrency.

[Callido]

I don't think it is possible to see it happen in Nigeria, except for the fact you will have to show your crypto assets publicly which is putting your self at risk, because at any time our government is willing to come for those who are into cryptocurrencies. It will be a bad step, don't expose your assets, use collateral or the common ways of checking your transactions and income before agreeing on loans.

[BIT-BENDER]

Hello friends, do you think Nigerian banks and other related bodies will ever consider categorizing Cryptocurrency as an asset that will make people eligible for loans? I read online that that is a move been considered already by countries like the United States.


https://www.investopedia.com/federal-regulator-opens-doors-to-crypto-in-mortgage-applications-11761381

Nigerian banks always try to work inline with the federal government and how ever they want to carry out their practices but be within the federal government jurisdiction.
Yes the whole government and crypto-currency fracas has gone down a bit but let's be guided, the federal government has not officially labeled Crypto-currency as an official legal tender.

I think private individual can be able to loan money in Nigeria with Crypto-currency especially stable coin as collateral but I don't think the banks will do that for you now.

[Charles-Tim]

Hello friends, do you think Nigerian banks and other related bodies will ever consider categorizing Cryptocurrency as an asset that will make people eligible for loans? I read online that that is a move been considered already by countries like the United States.

The CBN told banks not to directly get involved in bitcoin and other crypto related matters. If you want to accept cryptocurrencies as collateral, the borrower will have to send the coin (like bitcoin as an example) to the bitcoin address given by the bank. That means banks are getting involved in crypto already. I think they will need further clarity from the CBN but I think CBN may not allow that. If CBN allows banks to help people hold their bitcoin, do not be surprised seeing banks start accepting bitcoin as collateral.

[Coyster]

The law surrounding crypto has to change for that to happen, the new administration wey dey in power now in the United States dey somewhat friendly to cryptocurrencies, that is why something like this is being proposed, were lenders can consider a borrowers cryptocurrencies as part of their assets to determine if they are eligible for a mortagage.

That said, the Nigerian government has to be friendly to cryptocurrencies first, before we can talk about something like this, mortgage is not so popular here, but it can then be recognized in any loan application.

[Doan9269]

do you think Nigerian banks and other related bodies will ever consider categorizing Cryptocurrency as an asset that will make people eligible for loans?

Maybe we should first go with the way of allowing bitcoin adoption by the banks before it may be seen as either a consideration for loan or not, but currently in Nigeria, banks are not allowed to get involved in anything that has to do with bitcoin or cryptocurrency, because they are yet to clarify their doubts about this digital currency, but the people can on their own take risk in dealing with cryptocurrencies.

So if they can first allowed for its recognition as a digital currency and the banks granted access to using it, then having it for loan and other applicable uses should not be a problem.

[CryptSafe]

I understand that one can take a loan with any valuable asset as collateral, but this still puzzles me to ask what is the point of using your digital asset as collateral when you can change or convert them easily and use them for whatever purpose you want to use it for.  Another thing is that they are very volatile, and if they depreciate in value when payment is due, do you not think that the bank would still come after you? also, if the reverse happens, it would still amount to the same thing and maybe it would involve a difference process entirely and what if in a situation where something happens that the government takes a dive or turn of policy against crypto and looking at the fact that the bank is already in possession of your assets, do you think they would release it to you and do you also think that they would still accept it as collateral to cover for your loan? I think sometimes, it is better to avoid some kinds of situations than to get oneself trapped in them.

[Pablo-wood]

..

Our commercial and microfinance banks are subject to decisions made by the CBN and the CBN in like manner follow the rule established by the president. Before cryptocurrencies can be considered as an asset for loan,  it should be recognized as a legal tender and the regulatory framework eased. It will take a digital president who understands the revolution going on around the world to come up with a stand on the laws governing crypto currency in Nigeria.


We could recall in 2021 banks were  banned from facilitating crypto transactions (CBN’s) directives. Even though the ban has eased, some banks still avoid crypto related transfers to stay on the safe side of unclear laws.

[Gozie51]

I understand that one can take a loan with any valuable asset as collateral, but this still puzzles me to ask what is the point of using your digital asset as collateral when you can change or convert them easily and use them for whatever purpose you want to use it for. 

Bro, it shouldn't be a difficult puzzle to solve if at all it is possible in present day naija. The hodler maybe be targeting a short time loan where he will repay the loan and reclaim access to his coins and profit from its volatility especially where he has not gotten to his target selling or dumping price. On that kind of scenario, if you have an urgent need for money and you have not reached the time you want to sell, you can loan on it after to recover your hodling. That is also the philosophy of people who use their land or houses to get loan. It is the same thing if you also use your land or house to get loan instead of selling it outrightly.

However, for the Nigerian situation, that is currently impossible to use crypto as collateral for loan from the bank. First, the Nigerian government as not officially declared it as a payment system for the current and they have not authorized any official payment like bills, salaries etc using cryptocurrency. The bank therefore don't have the power to do that.

[EL MOHA]

Our commercial and microfinance banks are subject to decisions made by the CBN and the CBN in like manner follow the rule established by the president. Before cryptocurrencies can be considered as an asset for loan,  it should be recognized as a legal tender and the regulatory framework eased. It will take a digital president who understands the revolution going on around the world to come up with a stand on the laws governing crypto currency in Nigeria.

We could recall in 2021 banks were  banned from facilitating crypto transactions (CBN’s) directives. Even though the ban has eased, some banks still avoid crypto related transfers to stay on the safe side of unclear laws.

I think we are mistaken things here, bitcoin been a legal in a country is different from been a legal tender, legal tender means that it must be accepted like the fiat currency but been legal means the business have the right to take it as payment method or not, this is the same concept that the US uses, bitcoin is legal in the country including other cryptocurrencies but not a legal tender as the dollar is the official legal tender, aside US there are many countries where crypto is legal but not a legal tender.

So the only thing is bitcoin needs to be stated as been legal and then loan companies can decide whether to accept it as a mortgage. I think it is possible in Nigeria but first the government stands on this need to be known first.

But wait a moment!
Why would someone go take loan from bank and want to present their digital currency to Bank?
Well, I see no sense of having Bitcoin and you want to hold it back and borrow money, why not just convert few sat and do your things thank having to go through stress to loan money in the bank, besides Nigeria bank like I know can never accept Bitcoin as a collateral for someone to borrow money from bank after knowing how volatile the crypto currency market be. Do you also realize that any amount you are loan from bank are generally people funds that was stored in the bank, when the needs arises they go make use of the money than just giving out huge some of money and expect bank to have a volatile asset as their collateral this won't be possible.

If you’re a business man you will understand this better, there are some asset you wouldn’t want to dilute because you need money and there for you go into Loan with anticipation of extra funds coming to pay off the loan. For example now, a campaign participant member on this forum now might be holding bitcoin and would be in need of money to buy a house/land say $1000, instead of actually taking that off from his bitcoin holdings he believes money he gets from his weekly campaign on the forum can be used to pay that up he will simply mortgage the bitcoin by taking loan and then gather the money using his campaign payments and if completed gets his assets back without down sizing his assets

[Agbe]

We as a country is just getting started with crypto currency what Nigeria should be talking about in this present point in time is to see how we can get Bitcoin reserves as a country but for the main time I don't see that happening for now because it will take us some time before we can get to the level where the United States is in terms of crypto progress

[Fiatless]

Our commercial and microfinance banks are subject to decisions made by the CBN and the CBN in like manner follow the rule established by the president. Before cryptocurrencies can be considered as an asset for loan,  it should be recognized as a legal tender and the regulatory framework eased. It will take a digital president who understands the revolution going on around the world to come up with a stand on the laws governing crypto currency in Nigeria.

We could recall in 2021 banks were  banned from facilitating crypto transactions (CBN’s) directives. Even though the ban has eased, some banks still avoid crypto related transfers to stay on the safe side of unclear laws.

I think we are mistaken things here, bitcoin been a legal in a country is different from been a legal tender, legal tender means that it must be accepted like the fiat currency but been legal means the business have the right to take it as payment method or not, this is the same concept that the US uses, bitcoin is legal in the country including other cryptocurrencies but not a legal tender as the dollar is the official legal tender, aside US there are many countries where crypto is legal but not a legal tender.

So the only thing is bitcoin needs to be stated as been legal and then loan companies can decide whether to accept it as a mortgage. I think it is possible in Nigeria but first the government stands on this need to be known first.

You hit the nail on the head. Bitcoin being a legal tender means that individuals and businesses are under law to accept it as a legal tender. You can sue a business or individual for refusing to accept Bitcoin. When we say Bitcoin is legal, it means that it is a recognised currency. People can decide to reject it as a means of payment because it is not legal tender. An example is SOMEONE in Nigeria can reject the dollars for payment but can be sanctioned for refusing the Naira.

Bitcoin is legal in Nigeria and can be used as collateral for loans. Individuals or businesses can decide to have an agreement in which Bitcoin is used as an asset to access loans or credit facilities. Such an agreement can be recognised by Nigerian law. But banks or other financial institutions can not offer such credit services using cryptocurrencies as collateral until existing laws are reviewed.

[CryptSafe]

I understand that one can take a loan with any valuable asset as collateral, but this still puzzles me to ask what is the point of using your digital asset as collateral when you can change or convert them easily and use them for whatever purpose you want to use it for. 

However, for the Nigerian situation, that is currently impossible to use crypto as collateral for loan from the bank. First, the Nigerian government as not officially declared it as a payment system for the current and they have not authorized any official payment like bills, salaries etc using cryptocurrency. The bank therefore don't have the power to do that.

Indeed, the Nigerian government has not authorised the use of cryptocurrency for payments or business purposes officially, nor have they approved of the banks to start a form of exercise as it relates to their crypto acceptance, but I think with time, they would gradually have a look into it. However, crypto, as we all know, is designed for privacy, and as crypto enthusiasts, we ought to take our privacy very seriously and come to talk of it; taking a loan with crypto indirectly exposes one to third parties which ought not to be and by doing this, the banks or whomever you have the loan deal with would have you on their list as a crypto holder whilst they would likely be monitoring you and the possibility of your safety would likely not be guaranteed.

[Fiatless]

Indeed, the Nigerian government has not authorised the use of cryptocurrency for payments or business purposes officially , nor have they approved of the banks to start a form of exercise as it relates to their crypto acceptance, but I think with time, they would gradually have a look into it. However, crypto, as we all know, is designed for privacy, and as crypto enthusiasts, we ought to take our privacy very seriously and come to talk of it; taking a loan with crypto indirectly exposes one to third parties which ought not to be and by doing this, the banks or whomever you have the loan deal with would have you on their list as a crypto holder whilst they would likely be monitoring you and the possibility of your safety would likely not be guaranteed.

There is no Nigerian law that forbids individuals or corporate organisations from using cryptocurrencies for payments.  You can use Bitcoin and others to make payments if the parties involved agree on the means of payment. I have seen businesses that accept crypto in Nigeria and they do it openly without fear of intimidation, arrest, or prosecution. But you are correct that banks are banned from offering any crypto-related services.

[CryptSafe]

Indeed, the Nigerian government has not authorised the use of cryptocurrency for payments or business purposes officially , nor have they approved of the banks to start a form of exercise as it relates to their crypto acceptance, but I think with time, they would gradually have a look into it. However, crypto, as we all know, is designed for privacy, and as crypto enthusiasts, we ought to take our privacy very seriously and come to talk of it; taking a loan with crypto indirectly exposes one to third parties which ought not to be and by doing this, the banks or whomever you have the loan deal with would have you on their list as a crypto holder whilst they would likely be monitoring you and the possibility of your safety would likely not be guaranteed.

There is no Nigerian law that forbids individuals or corporate organisations from using cryptocurrencies for payments.  You can use Bitcoin and others to make payments if the parties involved agree on the means of payment. I have seen businesses that accept crypto in Nigeria and they do it openly without fear of intimidation, arrest, or prosecution. But you are correct that banks are banned from offering any crypto-related services.

May I call your attention to this that'  

Nigeria's President Tinubu signs bill recognizing digital assets;  President Bola Tinubu of Nigeria signed a bill into law officially recognizing digital assets, including cryptocurrencies.

From the above, you can see that it recognises crypto as a digital asset and not legal tender. Accepting it as legal tender means it is an official alternative to the national currency, which I do not think the government would accept at this point. Although they are looking at a regulatory process that could suit it that way but it is open for everyone to trade; hence, the CBN has not officially gotten itself involved in its dealings, but only the masses and enthusiasts.
This is also why you do not see it anywhere that an organisation makes it public to be a legal tender, except in a one-on-one conversation with their client, and for those who already accept it, they do not make it too obvious.


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[Versatile_choice]

I think this is almost impossible as Majority of Nigerians did not know about bitcoin, even if we choose to vote for this we won't be able to win the vote. And me personally would say No" to that due to the volatile nature of bitcoin, Because if you  borrow like 1BTC today being 1st of july let's say your pay back date is 1st of August. Before it will get to this due date, definitely you won't meet that same value you left in the early stage, this is the reason why it can never be possible. Moreover, I have never seen a country that accept crypto currencies as an asset for loans, even if there are country like this I think they're scares.