Peer-to-Peer Crypto trading systems: Is this the new norm in line with the Government’s ban and its legality?

Written by Elizabeth Layeni

March 8, 2021

On 5 February 2021, the Central Bank of Nigeria (CBN) issued a letter/reminder to all CBN regulated entities; deposit money banks (DBMs), non-bank financial institutions (NBFIs), and other financial institutions (OFIs) to the effect that dealings in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited. The letter further directed that all DBMs, NBFIs, and OFIs are to identify persons or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts were closed immediately. In response, commercial banks severed ties with cryptocurrency companies. The memo threatened several regulatory actions on financial institutions that refused to co-operate, and in response to this directive, companies that dealt in cryptocurrencies also stopped accepting deposits in naira.

Despite this directive issued by the apex financial institution in Nigeria, some persons are still desirous of the continued use of bitcoin and other cryptocurrencies. Bitcoin exchange platforms, which has been one of the popular ways to trade in cryptocurrencies acts as a middleman to match sellers and buyers of bitcoin. It makes use of order books which are electronic lists that brings the users offers of sale or purchase. The buyer or seller has no idea who the other party is, and as a result, such platforms offer users a certain level of anonymity. A user’s bank account is often the trading account for easier and streamlined trades. 


The new process then begs the question; Would peer-to-peer trading systems flourish as users seek to bypass the ban and continue the trade in crypto?

In the alternative, cryptocurrency users can make use of peer-to-peer crypto trading channels. Here, traders get to buy and sell cryptocurrency directly from each other, without the need for intermediaries. It offers security, ultimate payment flexibility, de-centralisation, and censorship resistance.

Where there is a will, there is a way

The Peer-to-Peer trading process has been around for long as long as can be remembered,, and has been a way of financing that enables individuals to borrow and lend money without the use of an official financial institution as an intermediary. Although the letter/memo circulated by the CBN does not criminalize the ownership of cryptocurrencies, it has however made ownership and facilitation of the same almost impossible.

The very essence of cryptocurrency is its decentralised feature, where users can trade among themselves through peer-to-peer channels. What the recent memo of the CBN has done is to regulate and/or prohibit dealings and facilitation of payment in cryptocurrencies. It doesn’t say anything about Peer-to-Peer Crypto trading channels for now, and it is safe to assume that Nigerians will continue to trade in cryptocurrencies through the medium of Peer-to-Peer channel/platform.

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