Central Bank in Top African Bitcoin Market Warns of `Gamble’

LAGOS (Capital Markets in Africa) – The central-bank governor of Nigeria, where bitcoin trading grew the most in Africa last year, said investing in the cryptocurrency is a “gamble” and hinted it may have to be regulated.

“Cryptocurrency or bitcoin is like a gamble, and there is a need for everybody to be very careful,” Central Bank of Nigeria Governor Godwin Emefiele said in an interview on Wednesday at his office in the capital, Abuja. “We cannot as a central bank give support to situations” where people risk savings to “gamble,” he said.

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. In January 2017, the central bank released a circular to lenders asking them not to use, hold, or trade virtual currencies pending “substantive regulation and or decision by the CBN.”

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. 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.

Bitcoin was little changed at $11,254 by 7:12 a.m in London compared with an intraday high of $19,511 on December 18, according to a composite of prices compiled by Bloomberg.

U.K. Prime Minister Theresa May on Thursday 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.

Source: Bloomberg Business News