ABCON calls on CBN to check cryptocurrencies’ impact on diaspora remittances

The Association of Bureaux De Change Operators of Nigeria (ABCON) has charged the Central Bank of Nigeria (CBN) to introduce measures to insulate diaspora remittances against the impacts of cryptocurrencies.

It made the call in its quarter one economic review, arguing that such measures were necessary to protect diaspora remittance inflows against the disruption.

Although the association commended the CBN for the N5/1$ rebate to encourage diaspora Nigerians to use official channels for foreign transfers, it noted that the CBN needed to address other issues that drive the patronage of cryptocurrency exchanges.

It said: “Public acceptability for cryptocurrency exchanges is rising, which could be responsible for the huge drop in diaspora inflows to Nigeria. Insecurity is giving it greater prominence as investors and citizens find cryptocurrency a haven for their wealth in case of any eventuality.

“In most emerging markets, Bitcoin transfers surged last year, as the COVID-19 pandemic uncovered cheaper and more efficient digital remittance services.

“Migrants sending money across borders to their families prefer the minimal transaction costs of cryptocurrency exchanges against the exorbitant cost of traditional money transfer companies like Western Union.”

In the review, ABCON pointed out that cryptocurrency transactions were faster than conventional transfers, which require passing through SWIFT, the interbank messaging system that handles cross-border payments.

“These exchanges override the political complications of official channels. The global reach of cryptocurrencies avoids the inflation risk inherent to official currencies, especially in politically unstable countries reliant on fickle foreign investors.

“Thus, while we commend the CBN for introducing the package of N5 for $1 transfer, it can be seen that the challenges exceed non-payment of foreign currency by the IMTCs and the exchange rate.

“Strategies that satisfy the most sensitive of these advantages of cryptocurrency exchanges must be introduced to redirect flows to the official channel,” it stated.

ABCON also expressed concerns over the country’s unemployment rate, stressing: “The government must apply radical approaches with the use of conventional and unconventional economic and political tools to redress the trend.”