Investing In Cryptocurrencies

Bitcoin price graph

Hailed by fans as a market-disrupting liberation, and demonised by critics as a dangerous, volatile creation, bitcoin and other cryptocurrencies are never out of the headlines for long. On December 16, 2020, the price of bitcoin hit $20,000 for the first time. On January 3, 2021, its value soared above $34,000, meaning the cryptocurrency had gained almost $5,000 in the first few days of 2021. Then on February 9, 2021, its value briefly hit a new record high of $48,000 after electric-car maker Tesla revealed that it had bought $1.5bn of the cryptocurrency and pledged to start accepting it as payment for vehicles.

On Sunday, February 21, the coin rallied to a new record high, peaking at $58,354 before falling dramatically two days later as low as $44,845.72, a loss of 18.4% for the day and a decline of almost a quarter from Sunday. At the time of writing [March 2], the coin had swung back up to $48,739.20 

Experts believe recent jumps in the price has been due to a wave of money from both institutional and private investors, spurred on by the coronavirus pandemic.

There’s a certain amount of mystery around bitcoin and other cryptocurrencies. Satoshi Nakamoto is the pseudonym used by the presumed person or people who developed bitcoin, created and deployed bitcoin’s original implementation software and conceived the first blockchain database.

The Three Biggest Cryptocurrencies

Bitcoin, the best-known and first major cryptocurrency, launched in 2009 and remains the market leader. Its market capitalisation — effectively its total worth — is $910bn, as at March 2. Ethereum and Cardano come in second and third, with respective market caps of $179bn and $39bn, as at March 2.

Since 2009, a wide range of challenger cryptocurrencies, dubbed altcoins, have arrived on the scene.

How Bitcoin Price Has Performed

The bitcoin price has climbed steadily since September 2020, fuelled by demand from investors and also news that PayPal will allow US customers to buy and sell the cryptocurrency within its app next year and Tesla pledging to start accepting it as payment for its vehicles. One bitcoin currently costs $48,739.20, as at March 2.

However, the cryptocurrency has made steady gains before, such as at the end of 2017 – before collapsing in 2018 (see graph below, which was produced in January 2020).

Extreme volatility is perhaps the most defining factor of the cryptocurrency market. To put bitcoin prices into investment profit and loss terminology, if you had invested at the start of 2020, you would be sitting on a 300% profit by the end of the year. However, if you’d invested at the start of 2018 and sold at the end of the year on New Year’s Eve, you would have lost 73% of your money as the bitcoin price collapsed.

If you wonder what market forces drive these prices up and down so wildly, you are not alone. While generally speaking the value of these currencies is, like anything else, linked to supply and demand plus the number of competitors, it is often difficult to determine what exact factors influence this erratic performance. This makes digital currency all the more high risk an asset to invest in!

Risk Of investing in cryptocurrencies

If you want to invest in crypto, ponder first whether you would buy a house in Rapid City, South Dakota. This city in the United States has just over 75,000 inhabitants and is reportedly one of the places with the most unpredictable weather on earth, where snow blizzards and summery thunderstorms occur without warning, before everything calms down again and temperatures rise dramatically the very next day. The weather of Rapid City is an apt metaphor to describe the behaviour of bitcoin & co: it can be totally bonkers.

If you do invest, be prepared to lose some or all of your money. Crypto is not conventional investing. 

In 2018, MPs called cryptocurrencies a “Wild West industry”. They are also not regulated by the UK watchdog, adding another layer of risk. From January 6, 2021, the Financial Conduct Authority will ban the sale of complex derivatives that speculate on cryptocurrency movements: financial services will be prohibited from offering retail customers contracts for difference, spreadbet options, futures and exchange traded notes that focus on digital currencies. 

Bank of England governor Andrew Bailey recently said he was “very nervous” about people using bitcoin for payments. He has previously warned that cryptocurrency investors should be prepared to “lose all their money”.

How Good Is Bitcoin Investment?

Bitcoin is at the (very) “high-risk” end of the investment spectrum. The price of cryptocurrencies is volatile; some can go bust, others could be scams, and occasionally one may increase in value and produce a return for investors.

As with any investment, do your due diligence and don’t pin all your hopes on one company or one cryptocurrency: spread your money around so you spread the risk and only invest what you can afford to lose.

Why Cryptocurrency Stocks Are Soaring Today

What happened
Shares of several companies with deep ties to the cryptocurrency market soared on Tuesday, Feb. 2. Cryptocurrency asset manager Riot Blockchain (NASDAQ:RIOT) gained as much as 10.1%, Chinese-American cryptocurrency mining expert Marathon Patent Group (NASDAQ:MARA) reached a high of 11.6%, and Canadian crypto-mining company Hive Blockchain (OTC:HVBT.F) peaked at 12.3%. Data analytics specialist MicroStrategy (NASDAQ:MSTR), which has converted its long-term cash reserves into direct bitcoin holdings, also followed suit with a 6.8% gain as of 3 p.m. EST. The stocks are surging because many of the leading cryptocurrency tokens are on the rise today, which should translate into stronger financial results for all of these companies.

So what
Bitcoin prices are up by 5.6% in 24 hours, and Ethereum prices have gained 12.5% over the same period. Ripple stabilized after a wild weekend, and that token for cross-border transactions has now gained 42% in seven days. Other big names gaining more than 10% today include Ethereum competitor Cardano and the bitcoin alternative known as Litecoin.

Cryptocurrencies are known for their volatile price swings, often crashing or soaring for no particularly good reason. That’s not the case today, because the blockchain-based sector actually has some solid news to share.

  • Index funds manager Bitwise Asset Management announced a new bitcoin fund, intended to provide an alternative to the popular Grayscale Bitcoin Trust (OTC:GBTC) with lower management costs and under the wing of asset management giant Fidelity (NYSE:FNF). If approved by financial regulators, this fund will help bitcoin’s liquidity and price stability while putting pressure on first-movers like Grayscale to improve their existing fund options.
  • The cryptocurrency exchange Gemini, managed by the Winklevoss twins of Facebook fame, is launching interest-bearing cryptocurrency accounts. Gemini’s crypto savings account offers annual percentage yields (APY) of up to 7.4%, which is a generous interest rate next to the national average of less than 0.1%. If this type of cryptocurrency holding accounts becomes common, that could be a solid argument in favor of treating crypto tokens as serious currencies and/or investment assets.
  • MicroStrategy isn’t done buying bitcoin quite yet. The company announced on Tuesday that it had acquired another 295 tokens worth $10 million in cash. The company now holds 71,079 bitcoin, worth $2.54 billion at current bitcoin prices. The original purchase price for this bitcoin reserve was approximately $1.15 billion. Larger corporations following MicroStrategy’s lead to move a portion of their long-term investments into bitcoin and other crypto tokens could make a world of difference to the financial stability of these markets.

Now what
On top of all that, business magnate and Tesla CEO Elon Musk has been supporting the not-so-serious Dogecoin token in a series of tweets recently, but last night he said that those were all jokes. In reality, Musk believes that “bitcoin is a good thing” and is a supporter of this specific token. He also said that bitcoin is “on the verge of getting broad acceptance by conventional finance people.” When the world’s richest man speaks, markets react.

Nobody knows where bitcoin, Ethereum, and other cryptocurrencies are going next, especially since governments around the world are still developing their legal and regulatory frameworks for handling these innovative but risky digital assets.

I happen to have a collection of various cryptocurrencies myself, all created from a very small bitcoin buy six years ago. So far, I see these tokens more as a fun experiment than a serious investment. That could change as the regulatory system develops and the cryptocurrency market crystallizes into something solid. For now, I’m happy to watch the crypto stocks above from the sidelines.

Should you invest in cryptocurrency?

It’s no wonder bitcoin and other cryptocurrency have captured the attention of investors around the world: if you invested $1,000 in bitcoin in 2010, it would be worth $287.5 million today. But crypto is frighteningly volatile, and should be approached with clarity and caution. Here’s what you need to know.

How much is bitcoin worth? Should you invest in it? If so, how do you invest in bitcoin? Great questions. And since its creation in 2009, bitcoin investing has intrigued, excited and, often, frightened market-watchers and investors alike. Notoriously volatile, the cryptocurrency traded at 8 cents per coin in 2010, to an all-time high of more than US$23,000 on Dec. 16, 2020. If you were to chart bitcoin’s worth in the intervening years, it would look like the profile of a terrifying roller coaster, with a long, slow, initial rise, followed by jagged peaks and valleys from 2017—the first time it crested US$20,000—to today.

There are other crypto investments, but bitcoin is considered the most widely traded and most successful. It has been mused that if you invested $1,000 in bitcoin at 8 cents per coin in 2010, your cryptocurrency investment would be worth $287.5 million today. Phew! No wonder bitcoin has captured so much interest.

What is bitcoin?
Bitcoin is a digital currency that many call the best cryptocurrency to buy, dubbing it “the new gold.” Of course, gold is one of the oldest currencies on earth, and currencies and methods of payment are always evolving.

What does this mean? Arthur Salzer of Northland Wealth Management offers: “Monetary value usually arises from objects that are scarce, durable and relatively easy to divide. Since the dawn of civilization, societies have used rare seashells, wampum, glass beads, and stones as money or a form of record keeping. Gold is an ideal example since it can be made into jewelry, coins and bars, but bitcoin is unique in today’s digital world since it is scarce, durable, has strong privacy characteristics.”

These days, gold is rarely used as a form of payment; it’s seen more as a store of value, and an investment or portfolio asset that is not highly correlated to stocks and bonds and cash.

Similarly, supporters and owners of cryptocurrency invest in bitcoin because they see it as a store of value, and a useful portfolio asset. Bitcoin may also work its way into a direct method of payment as well. In other words, you might one day use bitcoin to buy a car or a loaf of bread. It’s a lot quicker and easier to send digital money than to lug around bars of gold.

How to invest in cryptocurency
Bitcoin isn’t your typical investment. In fact, as a digital currency, bitcoin is not a physical coin. Rather, a bitcoin is created and then accessed by way of a digital code. This happens over the internet.

The ledger (blockchain) where the transactions are executed and monitored is public and for all to see. That’s referred to as “open source.”

The creator of bitcoin, who goes by the pseudonym Satoshi Nakamoto, describes bitcoin as “a purely peer-to-peer version of electronic cash that allows online payments to be sent directly from one party to another without going through a financial institution.”

In essence, bitcoin is a public ledger shared by a network of computers. To pay with or to exchange bitcoins, you send a signed message transferring ownership to a receiver’s public key. Each bitcoin is locked by a second private key. Think of a private key as a more complicated series of passwords called a “seed.” No one can access any amount of bitcoin without a private key. Obviously, it is crucial that you keep track of both the public and private keys, and do not share those keys except with a person you trust as your backup. If you lose your keys, you lose your bitcoin.

Blockchain is the revolutionary record-keeping technology that is the backbone of bitcoin. No single person or group has control of the currency; all users are in control collectively. The larger the bitcoin network gets, the more secure it gets. The computer hubs (called nodes) all over the world are all continually fact-checking each other’s ledgers. Each translation is scrutinized. When bitcoin is exchanged, it’s as if millions of tellers are simultaneously confirming the validity of the translation.

How much is bitcoin worth?
How much is one bitcoin worth? Well, it depends on the day. Bitcoin has value because enough people believe bitcoin has value. That may be no different than gold. Gold is really just a shiny rock; but because it was “decided” centuries ago that gold was desirable (and scarce), it is considered a store of value. It became a currency and also a store of wealth, and a portfolio asset in modern times.

While no one knows with any certainty how much gold might be discovered, the algorithm for bitcoin release is capped at 21 million coins. To date, just over 18.5 million bitcoins have been created, and there are almost 2.4 million coins left to be released. Currently, 900 coins are released each day, and the last bitcoins will be released around 2040. Bitcoin “miners” (a.k.a. programmers) are rewarded with the new bitcoins, in payment for their verifications of the transaction on the blockchain.

It is the scarcity of bitcoin, and its finite quantity, that offer the greatest appeal to those who reject or question the value of fiat currencies such as the US dollar, the euro or the Canadian dollar. Certainly, bitcoin, as well as fiat currencies, are created “out of thin air.” But while central banks can create as much new currency as they see fit, there is a hard limit to the amount of bitcoin. That’s why those who favour bitcoin often call it “the hardest currency on earth.”

On the other side of the ledger, critics will offer that bitcoin is worthless because it is created out of thin air, and only backed by those who accept and exchange bitcoin, and assign value. In contrast, fiat currencies are backed by the wealth creation and taxing powers of each nation.

How is bitcoin mined, exactly?
Programmers (bitcoin miners) have to locate the new coins and then perform a series of complex mathematical equations in order to unlock the new coins. These miners collectively are also required to confirm ongoing bitcoin transitions verifying the details. As noted above, millions of digital eyeballs are on each transaction. But in the end, only one miner or miner group (called a “node”) will be rewarded with the new issue of bitcoins.

The successful miner “walks away” with the new coins, and the group of confirmed and verified bitcoin transactions (the “block”) is added to the existing record (“chain”) of transitions. That is how we get to the name and technology known as the “blockchain.”

You might think of these miners as paid auditors.

Other desirable attributes of bitcoin investing
Bitcoin is decentralized. It is not regulated by any government or any financial regulator. As you’ve read, bitcoin is operated and ‘policed’ by its own community. This decentralization is one of the greatest appeals for many who have embraced bitcoin.

As you may know, governments around the world have confiscated gold in the past and, during some periods, private ownership of gold was outlawed. However, in theory, government agencies will not be able to confiscate your bitcoin.

Bitcoin is portable, and near frictionless to send and receive. It can be sent from anywhere to anywhere in just seconds. It knows no borders.

The potential for bitcoin investors
Bitcoin has delivered mind-boggling returns from its inception. If you consider it an asset or an asset class, it has been the best-performing for many periods over the last 10 years. The following table takes us to the end of November 2020. Bitcoin then went on to add another 50% in December of 2020.

Despite the jaw-dropping overall gains over time, bitcoin is incredibly explosive and incredibly volatile. To come up a winner, one would have to be prepared for some violent moves to the downside.

And given the volatility and explosive characteristics, bitcoin historically has made a wonderful portfolio asset. How’s that? There is very little (or negative) correlation between bitcoin and other major assets. That’s exactly what we’re looking for when we seek portfolio diversification. We want non-correlated assets that will move in opposite directions.

Keep in mind though, that because bitcoin is still very volatile and explosive at its core, it will increase the overall volatility of a balanced portfolio. But historically it has boosted returns (although it’s important to remember that past performance is not a guarantee of future returns).

As CoinShares offers, using a 4% weighting in a balanced portfolio increased returns from 9.3% to 18.8%. The calculation is a 5-year period to the end of October 2020 (although it’s important to remember that past performance does not guarantee future returns).

As well, looking at the period from January of 2014 to the end of October 2020, an allocation of bitcoin would have contributed positively to a diversified portfolio’s cumulative and risk-adjusted returns in 74% of one-year periods, 97% of two-year periods, and 100% of three-year periods since 2014, assuming quarterly rebalancing.

How widely accepted is bitcoin today?
In July 2020, Michael Saylor, the billionaire founder of MicroStrategy, an American corporation that offers software-based solutions to client companies, directed his company to hold part of its cash reserves in alternative assets. By September, MicroStrategy’s corporate treasury had purchased bitcoins worth $425 million. Square, the San Francisco-based payments company, bought bitcoins worth $50 million in October 2020. More recently PayPal announced that American users can buy bitcoins, as well as hold and sell it in their PayPal wallets. Every week we see more major financial institutions “come on board.”

How do you buy bitcoin and hold cyrptocurrency?
Like paper money, you hold bitcoin in a wallet. In this case, it is a digital wallet. And “wallet” is a misnomer; the wallet doesn’t secure your bitcoin, but, rather, storing your keys—digital code that is required to unlock your bitcoin investment. No one, not even you, can access your bitcoin without your keys.

You can hold your bitcoin in a “hot wallet” or a “cold wallet.” Hot wallets are digital wallets stored online, whereas cold storage or cold wallets are most often physical hardware devices. As you might guess, cold storage is the gold standard for securing bitcoin keys; money held in a hot wallet might be as secure as a physical leather wallet—it could be stolen.

A cold wallet, which costs upwards of $150, offers physical bitcoin storage and is more secure, like a vault at a bank. Technically, your cold storage cannot be hacked as it is not accessible online. Think of it like a vault at the bank. Of course, you would have to take great care to ensure that you understand the technology and processes for storing your personal keys in a cold wallet.

What bitcoin options are available in Canada?
With the following options you will not have to own or create your own wallet, and becoming a bitcoin investor is as easy as opening an account and pressing a few buttons to buy or sell bitcoin. These companies will hold and store your keys on your behalf. As with buying mutual funds or ETFs there are fees for these services.

You can buy bitcoin, as well as sell it, with Wealthsmiple; the setup process is very quick and simple.

The same level of ease goes with the all-in-one solution at bitbuy.

You can also purchase closed end mutual funds from 3iQ and from CI Galaxy. These bitcoin funds are available in U.S. or Canadian dollars. An added bonus with these funds is that you can hold them in registered accounts such as an RRSP, RRIF, or even a TFSA. (Given the potential of explosive gains, a tax-free savings account would be a wonderful place to have exposure to bitcoin.)

If you’re wondering how to invest in bitcoin outside of your TFSA, you might also consider Grayscale, which is a U.S.-dollar fund.

What are the risks of owning bitcoin?
The greatest risk is the hacking of bitcoin exchange platforms and the bitcoin blockchain platform. To date, the bitcoin platform has never suffered a serious hacking event, but certainly many third party exchanges that hold bitcoin for their clients have been hacked, and bitcoin has been stolen.

In Canada, many were victims of the QuadrigaCX debacle. A total of 76,319 unsecured creditors—virtually all of them QuadrigaCX clients—have come forward to claim they are owed $214.6 million collectively. In the case of QuadrigaCX, the founder died and allegedly took the keys to his deathbed.

There are many other risks, including from governments that may attempt to circumvent or regulate this new currency, which is in competition with their own fiat currencies.

The ownership of bitcoin might also be concentrated in too few names, who can then control or manipulate the bitcoin price.

For a full rundown on the risks. you might check out the prospectus for the 3iQ bitcoin fund.

Is bitcoin safe, and more final thoughts on bitcoin
Bitcoin is an incredibly volatile but explosive asset. That’s why you might not need an aggressive allocation for bitcoin to have a considerable impact on your portfolio.

And given that bitcoin is (likely) near all-time highs at the time of this post’s initial publication in January 2021, you might simply dollar-cost-average into your position. You might be offered lower prices in the future. But if bitcoin keeps (mostly) rising, then you’re making money on the way up. That’s not a bad deal, either. If you’re interested in going deep into bitcoin, have a read of The Bitcoin Standard from Saifedean Ammous.

Given its explosive nature, you might develop an exit or rebalancing plan as well. I invested at a weight of 2% with plans to add more. But the recent surge in bitcoin price quickly took me to over a 6% weighting. I may trim the bitcoin holding when it reaches a 15% weighting, reducing it to 10%. When or if it moves to 15% again, trim back to 10%. Rinse and repeat. My risk is managed, as I am then in a very positive position at the very first trimming—even if I were to lose the remaining position. (Disclosure: I have invested in bitcoin by way of the 3iQ funds.)

For me, it was a no-brainer risk-return proposition, but you will have to decide for yourself.

This post is not a recommendation for bitcoin or crypto investment advice. If you decide to invest, please ensure that you understand the risks, and the risk of permanent loss.

ETH Sees 32% 7-Day Gains As Altcoins Party

This week was undoubtedly an altcoin party. Even though Bitcoin is up quite a bit in the past seven days, it was altcoins that stole the show, charting major increases almost every single day.

Let’s start with BTC, though. It began the week at around $34,000 and was rather indecisive in the first few days, dipping below $33,000 on a few occasions. However, it was on Tuesday when the price started going up, reaching a weekly high at just shy of $39,000 before settling to where it’s currently trading at around $37,500.

All in all, BTC gained around 15% in the past seven days, but what happened in the altcoin market was far more interesting. The alternative coins reduced Bitcoin’s dominance to 60% as they claimed their piece of the pie.

Ethereum charted a new all-time high at $1784 today, while almost all of the top 20 cryptocurrencies (with small exceptions) are up double-digits. Aave skyrocketed by around 80%, BNB is up 40% – now trading above $60, Uniswap’s UNI is also up 40%, the same goes for Cardano. Meanwhile, XRP also saw an increase of about 55%, and bulls now eye the $0.5 target.

Stepping aside from prices, the week was also quite intensive in terms of news. Visa will pilot a crypto API that will enable institutions and banks to buy Bitcoin. It should be ready at some point this year. PayPal also released their quarterly report, revealing gains higher than anticipated for Q4 of 2020 after they enabled users to buy, sell, and store cryptocurrencies.

Elsewhere, well-known celebrity and rapper LL Cool J also began investing in the field alongside billionaire Paul Tudor Jones as both have contributed to a newly founded crypto VC fund.

All in all, the week was very dynamic, and the market does feel quite euphoric. Is this a sign of a local top? Or is this just the beginning of a parabolic movement? We have yet to see.

Market Data

Market Cap: $1152B | 24H Vol: 156B | BTC Dominance: 60.4%

BTC: $37,515 (+13.1%) | ETH: $1,689 (+27.1%) | XRP: $0.44 (+66%)[embedded content]

LL Cool J Is Now a Crypto Investor Alongside Paul Tudor Jones in a New VC Fund. The popular rapper LL Cool J will take part in a new cryptocurrency venture capital firm. Other names who will participate include the legendary investor Paul Tudor Jones, as well as the CEO of PepsiCo.

American Youtuber Logan Paul Teams Up With Bondly Finance to Release NFT. US celebrity and YouTuber Logan Paul has partnered up with Bondly Finance in a deal that will see them create and distribute non-fungible tokens (NFTs) for Paul’s ‘Pokemon Box Break.’ The YouTuber becomes the latest in a series of celebrities to jump on the NFT bandwagon.

PayPal Records Massive Gains In Q4 2020 After Enabling Cryptocurrency Trading. The leading online payment processor, PayPal, revealed gains larger than expected throughout the last quarter of 2020. This happens after the company allowed its customers to buy, sell, and store cryptocurrencies directly on its platform.

Retail Interest Soars as ‘Buy Crypto’ Google Searches Explode To New ATHs. The retail interest in cryptocurrencies is surging, according to data from Google Trends. Searches for ‘buy crypto’ skyrocketed to a new all-time high, signaling serious euphoria in the markets.

Ethereum Reaches ATH of $1,700: Economist Predicts $20k by Year-End. Ethereum continues on its path in uncharted territories with yet another all-time high. The cryptocurrency shows no signs of slowing down, and some optimistic predictions put it at $20,000 by the end of the year.

Visa to Pilot Crypto API Enabling Institutions and Banks to Buy Bitcoin This Year. The largest payment processing company, Visa, will pilot a new API that will allow its institutional clients and partners to buy, custody, and trade bitcoin, as well as other cryptocurrencies. It’s expected to happen at some point during this year.

Nigeria Crypto Ban

A body representing cryptocurrency and blockchain stakeholders in Nigeria has joined other crypto industry players in assailing the recent Central Bank of Nigeria (CBN) directive to banks. The CBN order, which seeks snuff out crypto entities from the banking system, took effect on February 5, 2020.

Not Just a Mere Reiteration

In a statement, the body, known as the Blockchain Industry Coordinating Committee of Nigeria (BICCON), also dismisses the CBN’s assertion that the new directive is just a “mere reiteration” of what it said in January 2017. The latest directive effectively banned financial institutions from providing services to persons and/or entities transacting in cryptocurrency.

Further, the BICCON castigates the CBN for failing to give “any adequate notice or court order of any court of competent jurisdiction.” Also highlighting the hastiness as well as the chaotic implementation of the order, the BICCON reveals how some crypto companies have been affected by this decision. The BICCON explains:

Since 5 February 2021, a number of persons and entities accounts have been closed. In one strange and exceptional case, the funds in the two corporate accounts of a cryptocurrency exchange were wiped out and then eventually closed.

Still, the representative body notes that the ban might face legal challenges since “there is currently no legislation by the National Assembly criminalizing or illegalizing trade in cryptocurrency in Nigeria.”

Senators Oppose CBN Directive

Meanwhile, prior to the release of the media statement by the BICCON, some members of the Nigerian Senate had expressed opposition to the CBN directive. According to reports, the Nigerian Senate wants the CBN to explain this decision, and the governor, Godwin Emefiele is set to appear before the legislative body.

However, at least one Senator, Sani Musa has come out in support of the CBN directive. In a speech, Musa claims cryptocurrencies, especially BTC, have made the Nigerian currency “almost useless.” Another regulator, the Nigerian Security and Exchange Commission also says it endorses the CBN directive. Reports quote the regulator saying:

For the purpose of admittance into the SEC regulatory incubation framework, the assessment of all persons and products affected by the CBN circular of Feb. 5, 2021 is hereby put on hold until such persons are able to operate bank accounts within the Nigerian banking system.

The SEC, which previously announced plans to regulate cryptocurrencies, is justifying the apparent about-face claiming there is further need to “analyse and better understand the risks.” The regulator, however, denies that there are “contradictions and inconsistencies” between what the SEC said in September 2020 and its current stance with respect to the CBN directive.

Countering False Assertions

In the meantime, the BICCON statement also responds to some of the false assertions about cryptocurrencies that are propagated by the CBN in its follow-up statement. Next, the body also lays out what Nigeria, which is already the largest cryptocurrency market on the African continent, stands to lose if the ban is not “reviewed or reversed.”

According to BICCON, Nigeria stands to miss out on “boosting remittances into the country.” Remittances sent via crypto rails have proven to be popular with a growing section of Nigeria’s expatriate community. Moreover, the representative body says if this directive is not reviewed, the country will see the “death of centralized cryptocurrency exchanges in Nigeria, particularly indigenous cryptocurrency exchanges who should be getting regulatory support to become globally competitive.”