Business Administration Project Topics

Assessing the Effects of Cryptocurrency Ban Policy on Investors in Nigeria




Background of the study

The human civilization has witnessed different means and mediums of transactions for the exchange of goods and services. Mostly, all these means and mediums are physical in forms such as metal coins or paper currency. However, with the advancement of technologies, especially computers and the internet, the digital mode of the transaction has come into existence. Most financial institutions and Governments of countries have promoted online payment as a safe and quick mode of transaction of physical currency. This type of usage of the currency is an attempt at digitalization of physical currency. In recent times the complete and true digital currencies (i.e. no physical form) have also been introduced from time to time.

The origin of money is a mystery but the emergence of coin and paper money is traceable to the seventh century B.C. (Dumas, 2015), though, money has not evolved a lot since then, its essence is still to facilitate transactions. Now, we have credit cards and online banking, and cryptocurrency.

Polillo (2011) introduced a fascinating theory regarding the production of currencies, the theory suggests that there are general social processes that allow for various kinds of networks and organizations to be able to create currencies. He also presented the principle of money as “multiple currencies” and argues that through social practices, societies constantly transform money in creative ways to better suit their needs.

Berentsen and Schär (2018) affirmed that Bitcoin (the first recognized cryptocurrency) originated with the white paper that was published in 2008 under the pseudonym “Satoshi Nakamoto,” as it was published via a mailing list for cryptography and has a similar appearance to an academic paper. It was made known that the creators’ original motivation behind Bitcoin was to develop a cash-like payment system that permitted electronic transactions but that also included many of the advantageous characteristics of physical cash.


Silva (2016) explained cryptocurrency to be a system characterized by a computer program with three main axes: first, a public system of registration of transaction, called blockchain, serving as an accounting book of its entries and exits; second, an encryption algorithm called asymmetric encryption- associated with a proof-of-work which is used to validate operations with the currency; and third, a decentralized computer network according to the design of the users (also called miners), which verify and validate transactions with the currency and update the public registry system-blockchain.

Cryptocurrency is a virtual currency that uses a web-based communication protocol to aid in the transfer of wealth from one person to another, but when the qualities of money are put in perspective, Bitcoin appears defective. According (Gulled & Hossain, 2018).

Some of those currencies which have emerged in the recent time are Litecoin (LTC), Ethereum (ETH), EOS (EOS), Cardano (ADA), NEO (NEO), Bitcoin (BTC), Monero (XMR), Ripple (XRP), Dash (DASH).

Nigeria has the second-largest Bitcoin market in the world with over $500 million worth of Bitcoin traded over the last five years. The CBN’s directive on cryptocurrency transactions will understandably have an effect on the cryptocurrency market in Nigeria as it essentially prevents traders from buying cryptocurrencies with their credit/debit cards issued by Nigerian banks or receiving proceeds of cryptocurrency sales from exchanges which facilitate the buying and selling of cryptocurrency (

Subsequently, on February 11, 2021, the SEC issued a statement stating that it would partner with the CBN to analyze and better understand the identified risks of cryptocurrency to ensure that appropriate regulations are put in place if cryptocurrency transactions are allowed in the future.

The CBN stated in the Press Release that cryptocurrencies are issued by unregulated and unlicensed entities and as such, the use of cryptocurrencies in Nigeria contravened existing law as they are not legal tender. It also identified the anonymity of cryptocurrency as an issue. It stated that anonymity and the lack of KYC made it susceptible to illegal use such as money laundering and the financing of terrorism. Another justification was the volatility of cryptocurrencies which it said has threatened the stability of financial systems in other countries.

This research aims to provide insightful information on the effect of the cryptocurrency ban policy on investors in Nigeria.

Statement of the problem

Cryptocurrency trading is one of the fast growing means of earning a living nowadays in the world. People engage into crypto business either as investors or traders. The introduction of Bitcoin by an unknown person or group of people using the name Satoshi Nakamoto in the year 2008 which the use began in 2009 created an avenue for individuals to diversify their means of earning and surviving. Many people instead of depositing their money in banks started investing into Bitcoin which 1 bitcoin  now is worth over 21,057,454.90 Naira and will still increase. Unemployed youths began investing into crypto business, leaving their money there for a long period of time, then cash out with interest. Some individuals in started a Crypto trading platform where people can invest and trade cryptocurrencies.

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The CBN letter to local financial institutions on Friday 5th Feb. 2021, ordering banks to shut down all bank accounts associated with cryptocurrency trading platforms was a big shock to Nigerians and Cryptocurrency traders and investors in the country. This ban has brought a lot of agitation from Nigerians who have been expressing their grievances on social media platforms calling on CBN to reverse the ban. The ban has led to closing all bank accounts that are connected to crypto businesses. Nigerians are no longer able to make deposits naira or withdrawal their funds into their Nigeria bank accounts from different crypto platforms they invested their money.

According to (, the CBN’s decision on cryptocurrency has also attracted attention from the highest levels of government. On the 11th of February, 2021, the Nigerian Senate deliberated on the CBN’s directive, with some senators expressing reservations about the ban on cryptocurrency transactions.The Senate thereafter resolved to invite the CBN Governor to give a briefing on the actions of the CBN.

More interventions like this may be seen as stakeholders deliberate on the potential far-reaching effects of the CBN’s stance on cryptocurrency in Nigeria Hence, this study seeks to ascertain if the CBN ban on Cryptocurrency trading in Nigeria has any effect on investors in Nigeria.

  Objective of the study

The primary objective of this study is to assess the effect of Cryptocurrency Ban Policy on Investors in Nigeria. Specifically, the study seeks to investigate if the CBN crypto ban policy has any negative effect on crypto investors in Nigeria.

 Research Questions

The following research questions guide this study:

1. Does CBN Crypto ban policy affect the finance of crypto investors in Nigeria?

2. Does the CBN Crypto ban policy discourage crypto investors in Nigeria?

Research hypotheses

The following null hypothesis was formulated and tested in this study:

H0: Cryptocurrency ban policy does not have any negative effect on Crypto investors in Nigeria.

  Significance of the study

This study will be of significance to the policy makers in Nigeria to bring to their knowledge the benefit of cryptocurrency trade and investment in the country ranging from reduction of unemployment rate among youths, reduction of crime rate, etc. This study will also, enlighten the CBN on the need to reconsider the ban on crypto business in the country haven seen that almost 97% of the Nigerian are into one crypto business or the other.

This study will also serve as a reference material to scholars, students and researchers who may want to carry out further researcher on this study or related domain.

  Scope of the study

This study will focus on the kind of effect the CBN cryptocurrency ban policy have had on crypto investors in Nigeria and the intending harm it will do them in the nearest future. The residents of Lagos State will be enrolled as the sample respondents for this study.

Limitation of the study

The major limitation the researcher encountered while carrying out this research work were the issue of finance, unavailability of materials, and time factor to combine both academic work and the research work.

  Definition of terms

Effect: a change which is a result or consequence of an action or other cause.

Cryptocurrency: A cryptocurrency, crypto currency or crypto is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership

Ban: A ban is a formal or informal prohibition of something. Bans are formed for the prohibition of activities within a certain political territory.

Policy: A policy is a statement of intent, and is implemented as a procedure or protocol. Policies are generally adopted by a governance body within an organization.

Investors: An investor is a person that allocates capital with the expectation of a future financial return or to gain an advantage.

CBN: The Central Bank of Nigeria is the central bank and apex monetary authority of Nigeria established by the CBN Act of 1958 and commenced operations on July 1, 1959.



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