Shortly after Tesla announced that it has invested over US$ 1.5 billion in the bitcoin cryptocurrency, the Central Bank of Nigeria (CBN) banned all forms of cryptocurrency trading.
Economists opine that policy conflicts cannot be predicted solely based on value positions or structural attributes. When there are policy conflicts amongst nations, attention should be drawn to the expectations of consequences. Stakeholders are also prompted to reflect on their interests and what they view as appropriate goals (Majone 1989, Fischer & Forester 1993, Hajer & Wagenaar 2003, Stone 2012).
Tesla indexed its annual 10-K report with the SEC this morning and disclosed the new bitcoin investment. The electric car producer and its stakeholders view Bitcoin trading as an appropriate goal for the future. It has indicated an interest in accepting Bitcoin as a form of payment for their products and services.
Founder and CEO of Tesla, Elon Musk, has been quite vocal on his Twitter handle about supporting the cryptocurrency. His backing came after his customers urged him to accept Bitcoin for vehicle purchases.
Cryptocurrencies such as Bitcoin have been speculated and debated to be beneficial to everyone and not only entrepreneurs like Elon Musk. Still, the die is cast. Not everyone sees it as having the potential to enable social or economic growth. Several leaders and heads of financial institutions around the world, including third world countries, perceive cryptocurrency as an interference in the traditional financial system dynamics. It is also seen as an enabler for technological criminal activity.
Countries such as China, India, Iran, Morrocco, Thailand, Bangladesh, Zambia and Uganda have placed bans on all forms of trading in cryptocurrencies. In 2017 and 2019, the Chinese government placed a ban on all Bitcoin activities. In April 2018, Iran's central bank banned all banks from trading in cryptocurrencies due to fears of possible abuse of cryptocurrency technology in the country.
India wasn't left out. The country, in April 2018, also announced a ban on cryptocurrency trading.
Nigeria, the economic giant of Africa has limited cryptocurrencies in its financial industry. The country has upheld its traditional banking policies for decades while supervising its digital coins. The rapid growth of the cryptocurrency industry across the world is unprecedented. Many industries have become rich overnight, flourished, and continue to find opportunities for financial growth. We cannot, however, turn a blind eye to the inherent risks that the cryptocurrency industry carries.
Cryptocurrency is practically a cash currency and, as a result, has attracted criminal communities of different types. These high-minded and incredibly skilled criminals can easily break into crypto exchanges and drain the crypto wallets of hard-working individuals. They also affect individual computers with malicious viruses that steal cryptocurrencies.
In light of these risks and warnings from the United States Federal Bureau of Investigation [FBI] regarding the actions of criminals through cryptocurrency, the CBN on Friday issued a statement prohibiting banks and financial institutions in the country from trading with cryptocurrencies.
The ban will help CBN track down hundreds of millions of US dollars brought illegally from the USA and other western countries into the country. The ban is a follow-up to the CBN circular on 28 February 2018.
While the news of Tesla's investment increasing the price of bitcoin this 2021 continues to generate excitement, many nations remain skeptical about trading with cryptocurrencies due to the inherent risks it poses.
We look forward to seeing Tesla grow and continue to push barriers. In the meantime, we won't overlook the reasoning behind the apprehension and subsequent prohibition of cryptocurrency trading in many countries.
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