Nigeria’s financial sector insurance regulator has warned its citizens of the lack of insurance cover to any risks related to cryptocurrencies like bitcoin.
The Nigerian Deposit Insurance Corporation (NDIC) has moved to warn retail investors that the authority will not afford any insurance cover to those dealing with cryptocurrencies, or indeed any digital currencies not issued by the country’s central bank.
Speaking during a two-day workshop addressing financial disruption by digital currencies last week, NDIC’s director of research for policy and international relations Mohammed Umar bluntly underlined a hands-off approach to cryptocurrencies in Nigerian society, as reported by regional publication Premium Times.
“The financial regulatory authorities are not playing catch up on the digital currency race in Nigeria,” Umar said, claiming “there is no country in the world that allows its citizens to use digital currencies as money not issued by the Central Bank.” The remark, strictly speaking, is untrue. As an example, Japan’s legislation to acknowledge bitcoin as a legal method of payment began in April this year. State officials in other countries like Iran and Bahrain have publicly revealed intentions toward adopting or integrating bitcoin into their societies.
Pointing to previous warnings issued by multiple financial authorities including the country’s central bank, the official stressed that the public notices are “to warn Nigerians who want to trade in bitcoins as gamblers.”
He went on to add that adopters and traders will not be secured by any protective measures otherwise enforced by the insurance regulator.
The official stated:
If you can buy a bitcoin, nobody will stop you. It is at your own risk. A bitcoin is not covered by the CBN [Central Bank of Nigeria] rules and NDIC will not insure it. We have consistently warned Nigerians that anyone who trades in bitcoin does so at his own risk.
Earlier this year, Nigeria’s central bank issued a notice to financial institutions in the country to warn them of cryptocurrency transactions, mandating them against using, holding or transacting in cryptocurrencies. Five specific currencies figured in the circular, namely Bitcoin, Ripple, Monero, Litecoin and Dogecoin. While commonly misinterpreted by the media as a sweeping cryptocurrency ban, the notice was more of a warning that likely led to the shuttering of banking services for local bitcoin companies and exchanges.
In September, the central bank’s deputy director publicly admitted that the authority won’t be able to stop the disruptive tide led by blockchain-enabled cryptocurrencies. Speaking at the same conference, the head of Nigeria’s cyberspace watchdog also saw the inevitability of cryptocurrencies permeating into society as “facts that we must face, whether we like it or not.”
The recent remarks from Nigeria’s insurance regulatory official add to the above statements, revealing the lack of any effective means to curb everyday investors and citizens adopting decentralized cryptocurrencies.