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BREAKING NEWS: CBN gives reasons for banning cryptocurrency

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The Central Bank of Nigeria (CBN) has explained reasons behind banning of cryptocurrency which has generated controversies and condemnation across the nation.

In a statement on Sunday, Osita Nwanisobi, Acting Director, Corporate Communications, clarified that that the CBN circular of February 5, 2021 did not place any new restrictions on cryptocurrencies.

He recalled that all banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies.

Nwanisobi noted that the CBN’s position on cryptocurrencies is not an outlier as many countries, central banks, international financial institutions, and distinguished investors and economists have also warned against its use.

He said China, Canada, Taiwan, Indonesia, Algeria, Egypt, Morocco, Bolivia, Kyrgyzstan, Ecuador, Saudi Arabia, Jordan, Iran, Bangladesh, Nepal and Cambodia have all placed certain level of restrictions on financial institutions facilitating cryptocurrency transactions.

CBN said in China, cryptocurrencies are completely banned and all exchanges closed as well.

Nwanisobi said even famed investor Warren Buffett has called cryptocurrencies “rat poison squared,” a “mirage,” and a “gambling device.”

Mr. Buffett believes it is a “gambling device” given that they are mostly valuable because the person buying it does so, not as a means of payment; but in the hope they can sell it for even more than what they paid at some point.

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During an online forum hosted by the Davos-based World Economic Forum few weeks ago, Andrew Bailey, the Governor of the Bank of England, highlighted the extreme price volatility of cryptocurrencies as one of the biggest flaws and explained that this flaw makes it impossible for them to be used as a lasting means of payment.

“It is not surprising he would take that position because, Bitcoin, the best-known cryptocurrency, hit a record high of $42,000 per unit on January 8, 2021, and sank as low as $28,800 about two weeks later. This is far greater volatility than is found with normal currencies.”

CBN listed the justifications for CBN’s recent policy reminder.

Nwanisobi said first, in light of the fact that they are issued by unregulated and unlicensed entities, their use in Nigeria goes against the key mandates of the CBN, as enshrined in the CBN Act (2007), as the issuer of legal tender in Nigeria. In effect, the use of cryptocurrencies in Nigeria are a direct contravention of existing law.

He highlighted the critical between a Central Bank issued Digital Currency and cryptocurrencies, adding that as the names imply, while Central Banks can issue Digital Currencies, cryptocurrencies are issued by unknown and unregulated entities.

“Second, the very name and nature of “cryptocurrencies” suggests that its patrons and users value anonymity, obscurity, and concealment. The question that one may need to ask therefore is, why any entity would disguise its transactions if they were legal. It is on the basis of this opacity that cryptocurrencies have become well-suited for conducting many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.

“Indeed, many banks and investors who place a high value on reputation have been turned off from cryptocurrencies because of the damaging effects of the widespread use of cryptocurrencies for illegal activities. In fact, the role of cryptocurrencies in the purchase of hard and illegal drugs on the darknet website called “Silk Road” is well known. They have also been recent reports that cryptocurrencies have been used to finance terror plots, further damaging its image as a legitimate means of exchange.

“More also, repeated and recent evidence now suggests that some cryptocurrencies have become more widely used as speculative assets rather than as means of payment, thus explaining the significant volatility and variability in their prices. Because the total number of Bitcoins that would ever be issued is fixed (only 21 million will ever be created), new issuances are predetermined at a gradually decelerating pace.

“This limited supply has created a perverse incentive that encourages users to stockpile them in the hope that their prices rise. Unfortunately, with a conglomeration of desperate, disparate, and unregulated actors comes unprecedented price volatility that have threatened many sophisticated financial systems. In fact, the price of ether, one of the largest cryptocurrencies in the world, fell from US$320 to US$0.10 in June 2017. The price of Bitcoins has also suffered similar volatilities.

“Given that unlike Fiat money, which is accompanied by full faith and comfort of a country or Central Bank, cryptocurrencies do not have any intrinsic value and do not generate returns by themselves. When one buys a stock, say of a conglomerate in the Nigeria Stock Exchange, its price reflects the activity and production of that conglomerate and the value people place on their goods and/or services. This price may rise as the conglomerate produces better goods/services and probably gains greater market share.

“The reverse would be true if the conglomerate does not innovate to improve the quality of its goods/services. In other words, the price of that stock reflects market fundamentals. In contrast, , cryptocurrencies do not have fundamentals and would never have fundamentals. Investors only buy in the hope that its use and acceptability will rise, thereby pushing up its demand and price.But since new versions of cryptocurrencies come on stream with new mathematical models, an infinite supply may someday crash the price to zero.

CBN stressed that its actions are not in any way, shape or form inimical to the development of FinTech or a technology-driven payment system.

The apex bank said to the contrary, the Nigerian payment system has evolved significantly over the last decade, leapfrogging many of its counterparts in emerging, frontier and advanced economies propelled by reforms driven by the CBN.

The statement said this was evident from the variety of participants, products, channels, cutting-edge technology in the payments system.

CBN said the system was validated by the astronomical growth of volume/value of transactions and the fact that Nigeria is an investment destination of choice for international financial technology companies because of CBN’s policies that have created an enabling investment environment in the payments system.

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Breaking News: Uche Obguagu, 5 other Imo Assembly Members suspended.

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Few minutes ago, the member representing Ikeduru State Constituency in Imo State House of Assembly, Amb Uche Ogbuagu among other five House Members were suspended by the leadership of the House.

Lead Express gathered that the House Members after emergency sitting resolved to suspend the House members.

At the time of filing this report, this paper had not learnt the reasons behind the sudden suspension.

The six House Members suspended were; Hon.Uche Ogbuagu, Hon. Philip Ejiogu, Hon. Kennedy Ibeh, Hon Dominic Ezerioha, Hon Crown Onyemaechi.

Read Also; Okorocha takes Imo APC battle to Abuja, insists on Nwafor led Excos

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BREAKING: Army renames Operation Lafiya Dole in North-East

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The Chief of Army Staff, Lieutenant General Ibrahim Attahiru, has approved the renaming of the ongoing counterinsurgency operation in the North-East from Operation Lafiya Dole to Operation Hadin Kai, the Nigerian Army has said.

This was contained in statement on Friday signed by Director Army Public Relations, Brigadier General Mohammed Yerima.

The statement was titled, ‘Nigerian Army Renames Operation In The North East, Seeks Inclusiveness’.

It read, “The Chief of Army Staff Lieutenant General Ibrahim Attahiru has approved the renaming of the ongoing Counterinsurgency Operation in the North East from Operation Lafiya Dole to Operation Hadin Kai.

“This is premised on the fact that the Nigerian Army has made a lot of progress over the years and needs to re-align for better efficiency.

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“Also affected in the re-designation are the Army Super Camps which now reflect the nomenclature of the formations and units followed by the name of the locations they occupy while sub-units are redesigned as Forward Operating Bases followed by the name of their locations. All these changes are with immediate effect.

“The renaming is in line with the COAS Vision of having ‘A Nigerian Army that is Repositioned to Professionally Defeat all Adversaries in a Joint Environment’.

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BREAKING: Five dead as gunmen set ablaze Imo police area command

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Tension heightened in Imo State, on Monday, as unknown gunmen razed the Okigwe South Police Area Command situated in Orieagu in the Ehime Mbano Local Government Area of Imo State.

A police officer at the headquarters, who spoke to our correspondent in the evening, said that on arrival, the gunmen opened fire on the cops who challenged them.

It was learnt that the invaders freed all the suspects in the cells and carted away arms.

The source said that no fewer than five policemen were shot dead by the attackers as they torch the security facility.

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The source said, “Our area command headquarters in Okigwe south is on fire. Six policemen shot dead. They also freed the suspects before igniting a fire on the facility.”

When contacted, the police spokesperson in the state, Orlando Ikeokwu, said that five policemen were killed while one was missing during the attack.

He disclosed that the command had launched an investigation into the onslaught.

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