Nigeria’s central bank warns on virtual currencies, says ‘it is like gamble’

Godwin Emefiele, Nigeria’s central bank governor said investing in the cryptocurrency or bitcoin is a “gamble” and hinted it may have to be regulated.

Emefiele disclosed this in an interview with Bloomberg in Abuja.

According to the governor, in Nigeria, where bitcoin trading grew the most in Africa last year, cannot assure investors that the bank will give support to trading the digital currency.

Emefiele is the latest among regulators globally to express concern about bitcoin, one of the most popular cryptocurrencies, because of high volatility and a perception that it facilitates crime.

“Cryptocurrency or bitcoin is like a gamble, and there is a need for everybody to be very careful,” Emefiele said, in an interview with journalists at his Abuja office on Wednesday.

He, further warned: “We cannot as a central bank give support to situations where people risk savings to “gamble.”

The CBN had on January 12, 2017, released a circular to commercial banks and other financial institutions asking them not to use, hold, or trade virtual currencies (VC), pending ‘substantive regulation and or decision by the CBN’.

According to the statement, “transactions in VCs are largely untraceable and anonymous making them susceptible to abuse by criminals, especially in money laundering and financing of terrorism. VCs are traded in exchange platforms that are unregulated, all over the world. Consumers may, therefore, lose their money without any legal redress in the event these exchangers collapse or close business.”

Still, demand for the digital currency is surging in West Africa’s biggest economy, with peer-to-peer transactions rising almost 1,500 percent this year, second only to China, according to data from LocalBitcoins.

According to the data, a bitcoin wipe-out would generate the biggest losses in Russia, followed by New Zealand and Nigeria, according to a report published by Citigroup Inc. in December.

U.K. Prime Minister Theresa May on Thursday, according to Bloomberg, promised to consider clamping down on the cryptocurrency. Central banks in China and Russia have stopped local-exchange trading of bitcoin.

“I have asked my colleagues in the research and monetary-policy department to study the market and get to know what the issues are,” Emefiele said.

The central bank may in future “make some very concrete pronouncements as to the direction,” he said, without giving details.

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