Digital Currency Risks Being Monitored: Nigeria’s Depositor Funds Insurer

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Nigeria ’s depositor protection body has said that the country is
monitoring the risks associated with digital currencies.
According to a deputy director at the Nigeria Deposit Insurance
Corporation (NDIC), Kabir Katata, this is ongoing process is being
done with a view of resolving concerns that may arise with regards
to protecting the general public.

“We should continue to monitor developments in digital currency
so as to resolve any concern on legal, financial and consumer
protection,” said Katata as initially reported by The Punch.
Katata, however, noted that the concerns were not limited to
Nigeria and were evident across the globe:

“Regulators in the financial sector are showing concerns over the
risks that are associated with the digital currencies, which is a
new phenomenon in many financial institutions … That is why
regulatory/supervisory authorities in many countries are seriously
concerned about DCs [Digital Currencies].”

NO RISK TO GLOBAL FINANCIAL STABILITY. 

The NDIC deputy director also pointed out that digital currencies
do not pose stability risk to the global financial system though
they raise other concerns such as ‘consumer and investor
protection, market integrity and money laundering/ terrorism
financing’.

At the same time, Katata also revealed that both government
agencies and financial institutions in Nigeria were exploring
blockchain technology as it has the capacity to drastically
transform the country. According to Katata, distributed ledger
technology has the potential of ‘reconfiguring all aspects of the
society and its operations’.

This is not the first time that the NDIC is expressing its views on
cryptocurrencies. As CCN reported earlier this year, the regulatory
body mandated to protect depositor funds warned that
investments in cryptocurrencies were not insured by the NDIC as
they were not issued by the Central Bank of Nigeria (CBN) or any
other country’s reserve bank.

AT YOUR OWN RISK

A year ago, the NDIC had issued the same warning saying that
Nigerians wishing to invest n cryptocurrencies were doing so at
their own risk while noting that there was no plan to prevent
citizens from purchasing cryptocurrencies.

Nigeria’s central bank also holds a cautious stance on
cryptocurrencies similar to that of the NDIC. In January the CBN
governor equated investing in bitcoin to gambling.
“Cryptocurrency or bitcoin is like a gamble, and there is a need for
everybody to be very careful. We cannot as a central bank give
support to situations where people risk savings to ‘gamble,” said
the governor of CBN, Godwin Emefiele, at the beginning of the year
as CCN reported.

Source : https://www.ccn.com