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Cryptocurrencies are digital/virtual assets that can be used as means of exchange for goods and services. Since the world is in a state of transition, cryptocurrencies are here to render certain unique advantages over the normal ways of transacting.

Banking institutions are hesitant to embrace cryptocurrencies, even though the world of cryptocurrency is gradually developing and gaining popularity, the banks are feeling that the inherent risks outweigh the possible benefits. Although regulatory organizations such as the CBN are not fully aware of the benefits of this technology, with proper enlightenment, they can learn the possible ways blockchain will help financial institutions innovate and become more efficient. 

The banking industry may be apprehensive about crypto; however, financial institutions and their clients might benefit greatly from digital currencies if they are willing to accept the leap.


According to former Citigroup CEO Vikram Pandit, in the coming years, every major financial institution would want to buy and sell cryptocurrencies, because over time they will emerge as opportunities. Hence, in order not to be left behind, financial institutions must learn to embrace this technology and see it as a partner rather than an opponent. There have been several recent industry advancements that can relieve banks’ anxieties about the risks and enable them to focus on the potential benefits of cryptocurrency adoption, the banks can benefit when they embrace this technology and key into it instead of trying to fight it.

After studying this technology, they will realize that their involvement in the technology can help battle their constant concern from knowing your customers (KYC), anti-money laundering (AML) to volatility and the decentralized nature which can be handled by acceptance first.

 Banks can leverage on the following:


Banks grew with the purpose of connecting communities together and to facilitate trade and commerce, and with this purpose the security of their customers asset are their utmost priority. Cryptocurrencies are a great vehicle for the success of the financial sector and, banks can no longer ignore this fact being that it outperforms conventional banking and offers greater efficiency, and more transparency.

Financial sectors without doubt have a strong reason to be skeptical about the crypto space but this could be fixed if crypto is adopted in their system and “crypto custody” is put in place, in crypto custody, financial sectors get to join the crypto market and build a communication channel between them and asset holders, this will in turn preach safety and confidence to people about digital assets. Therefore, they will hold access to the private keys associated with their client’s wallet, they don’t hold the asset themselves, they hold the cryptographic keys.

According to Bank of America they referred to the crypto space as too large to ignore and as the world of cryptocurrency continues to expand, the financial sector would not be left out if they could implement crypto custody into their system rather than fighting it.


Cryptocurrencies are decentralized, this means that owners have complete access to their assets, however, the banks could help solve the problem of conversion of this asset to fiat currency (Naira) by giving access and providing liquidity to investors to convert their cryptocurrencies to naira.

When this process is ongoing, charges can be applied, these charges are benefits to the banks for creating a solution to the conversion problem asset holders face, the economy could also benefit from this by taking tax from each conversion. 


Also, banks can regulate malicious transactions, money laundering, illegal activities, and scams by involving with the exchanges and insisting that they abide by KYC/AML due diligence for customers to end the risk that transactions pose, the blockchain technology could automate the KYC/AML check using smart contract and make a simplified share of individuals data, all customers data may be stored on a single blockchain, This blockchain data might subsequently be used by all financial institutions, allowing for swift consumer evaluations and the identification of any red flags implying illicit or unlawful behavior.


Many users are concerned about the hacking of personal wallets and exchanges. Well-known banks may be able to assist in the protection of digital currencies against theft or hacking, putting customers’ minds at ease. With a smart contract in place, transactions are dependent on computer code rather than an individual’s conduct, there is a lower level of trust required between parties when entering a smart contract arrangement. Banks might help to build confidence by acting as a trusted third party for smart contracts such as mortgages, commercial loans, letters of credit, and other transactions


Many financial institutions are wary about the impact of crypto on the banking sector, without proper knowledge of how they could be involved in the technology, they assume it’s a risk to enter the space.

Just like every other technology they are always concerns about new technology but also enormous potentials for growth so it’s advisable not to overlook the advantages because of the concerns surrounding this technology.

Financial institutions should be enlightened that they can play a big role in the crypto space by adding assurance and regulation to the space, this will take banking into the next stage of innovation.

With the help of a blockchain consulting company such as Convexity, a company that is grounded with the knowledge of blockchain technology and can grantee we can put the financial sector through the dos and don’ts of the space, advise them on what they need in place to benefit from the growth of this technology, certainly they have nothing to worry about.

Running your day-to-day business requires you to predict or at least have a vision of future. As our world is fast growing into digital advancement, being prepared for digital disruption such as cryptocurrencies adoption as well as being able to transform your business to the latest advancement, has become more challenging that you can ever imagine. The transformation of business digitally that we are experiencing today will not vanish away rather it will continue to wax stronger considering the benefit that accompany blockchain technology and its adoption. Therefore, we understand how important it is for you to transform your business by running it on the blockchain technology.

We at Convexity Technologies Limited are open to guide you through this journey. The enormous resources the crypto space has isn’t something to overlook and soonest every big bank will need crypto in their playbook.

Book an appointment with us today and join the moving train.

“CBDC is a Centralized Network, it has no resemblance with Cryptocurrency” – Adedeji Owonibi, Founder, Convexity

“CBDC is a Centralized Network, it has no resemblance with Cryptocurrency” – Adedeji Owonibi, Founder, Convexity

Our COO Adedeji Owonibi in an interview section with Tech Build Africa had this to say about Central Banks CBDC replacing paper note.

Can the Federal Government be trusted on this?

Permit me to paraphrase the question, more likely to be can the Naira be trusted? Yes, the Central Bank Digital Currency is clearly going to be trusted, because it’s still the same thing, just you know, the apex bank is exercising the power they do have with the CBN act to be the sole printer and minter of money used within that jurisdiction that is known as the legally tendered currency in that country in this case Nigeria

So, if we trust Naira, because, with Naira, we pay our school fees, we use Naira for religious offering and all sort of things we do today.

Exactly the replica of that will happen. Now, the question probably would have come up from the issue of decentralization, which is the main central promise of blockchain and they say if you don’t trust people, you can use blockchain to enforce transparency, but they are not saying we want you to trust us for more transparent money and all that, they’re just saying that the Naira we used to have we want to digitize.

So nothing really changes, it is central, it has no resemblance with cryptocurrencies because it works on a decentralized network, but this one is going to be a centralized network that is owned, controlled and printed by the Central Bank. So it’s still the same thing with the Naira we use today.

It is a threat to all governments in the world. We did a publication on our website some days ago, where we asked “Can the CBN legally issue a Central Bank Digital Currency?”

We clearly said ‘No’, they don’t have legal backing to actually do it even if they want to. And why did we say that?

We’re resting on IMF’s report that says over 80% of Central Banks around the world cannot even issue CBDC For these two reasons:

One is that the Central Bank Enabling Act like in the case of the Central Bank of Nigeria act does not in any way recognize anything like a digital or cryptocurrency.

The CBN only knows about the issuance of coins and paper, so for them to be able to do anything different from what is embedded in the act, they have to go back from the act of the National Assembly to redo that.

So has that been done? The answer is no. So the second reason is actually based on the technical capacity of Central Banks around the world as the IMF also found that 80% of these Central Banks do not have the capability on their own to begin rolling out CBDC.

The timing on the Central Bank is a bit dicey. Well, let’s keep our fingers crossed, probably there are some inner capabilities we are not aware of, and they want to quickly rush it by December, and that to me is not a feasible date.

China for instance is still doing a test run since 2013, So if China with all its technological capabilities has not recorded success yet.

I don’t see why the Central Bank of Nigeria is rolling it all out in December, except they’re probably not going to be building from the bottom-up and they are just going to be plugging into some already made solutions.

So if this is implemented by the intended date how do you see it influencing the Nigerian economy?

Yes, for me, it’s going to make trade more fluid, make a transaction faster, is going to enable easy trades within ourselves, including the foreign people that want to use it because it can easily be transferable.

I think the other aspect will be censorship, whether the government will be tracking everything you buy is another aspect that a lot of people have been asking me as a Compliance Specialist and somebody that is into blockchain and regulations and all those are investigative part of it.

All to make sure that the privacy of people is ensured, even when the Central Bank rolls out the currency.

China just did this and they did not promise their citizens any privacy, they know they are going to see their citizen’s transactions and everything that they do with their money. So for Nigeria, we don’t know because we are not a totalitarian community, we are a democracy.

So we are not too sure of how the Central Bank will ensure that privacy for individuals are guaranteed which is a right for anyone, except there is a reason to unmap, whoever is doing it to see if there’s any legality.

So those are grey areas that we’re still going to see how it’s going to work was by and large is going to be accepted in my view.

El-Salvador recently adopted Bitcoin as its legal tender, could Nigeria have taken the same path?

You know, it takes very innovative leaders. Leaders with high foresight having an understanding of the technology and its trajectory for them to do that.

Most countries, we beg to disagree, but I think a lot of countries will follow suit. We see discussions happening in I think in Jamaica, Belarus and some other countries are trying to take the same path in making it their national currency because of stability.

IMF has however warned about the volatility of making that currency a national currency, and IMF is in discussion with Belarus on this.

So far, Nigeria, I don’t see Nigeria in that path, because we need leaders with an understanding of this technology, a situation where the CBN Governor refers to those who trade in cryptocurrency as criminals.

Can the government guarantee privacy?

The only part that we are concerned about is the interplay of privacy and censorship around this proposed digital currency.

At which point, do you ensure that compliance is happening? At which point do you stop just trailing and monitoring your citizen to see what they spend their money on?

So that privacy point and the break in reconciling these two gaps, you know, ensuring there’s compliance and ensuring the privacy of people is a dicey grey area that we want to get clarification on and for the Central Bank to give confidence to that money, remember that this CBDC is not coming in isolation as it is coming into an economy where you have over 8000 cryptocurrencies playing and people are transacting with their choice cryptocurrencies.

So for me as a Nigerian to say I’m going to transact with Naira, there must be some incentive to citizens to use it.

And so we don’t know what incentive the central bank wants to bring. Maybe they want to give some discount where you use the Naira as a digital currency. We are just waiting to see more details about the rolling out of this CBDC, which we’re still looking to get insight into.

Why CBDC’s issuance by CBN may be illegal in Nigeria like other 133 countries

Why CBDC’s issuance by CBN may be illegal in Nigeria like other 133 countries

Many observers argue that the imminent arrival of central bank digital currency (CBDC) could herald the biggest shake-up to the world’s monetary system for nearly a century.

But, say the authors of a new working paper from the International Monetary Fund (IMF), CBDCs may not even get off the starting blocks in many countries for a fundamental reason: they are illegal.

According to Wouter Bossu, Masaru Itatani, Catalina Margulis, Arthur Rossi, Hans Weenink and Akihiro Yoshinaga, the authors of the IMF paper, close to 80 percent of the world’s central banks are either not allowed to issue a digital currency under their existing laws, or the legal framework governing CBDC issuance is unclear

CBDCs may not even get off the starting blocks in many countries for a fundamental reason: they are illegal

“We reviewed the central bank laws of 174 IMF members and found out that only about 40 are legally allowed to issue digital currencies,” the IMF said in a blog published to accompany the release of the paper.

In 61 percent of the countries it surveyed, the IMF said, the local law only permitted central banks to issue money in the form of physical cash (banknotes and coins).

For example, in the eurozone, said the IMF, the legal framework specifies that electronic money can only be issued by private institutions, and not by the central bank. This restriction is embedded in the EU’s 2009 directive on electronic money institutions, it said.

In a further 16 percent of countries, the law regarding the issuance of CBDC was unclear, said the IMF, while only in 23 percent of countries does the legal framework give an apparent green light to this new form of money.

IMF chart

“Any money issuance is a form of debt for the central bank, so it must have a solid basis to avoid legal, financial and reputational risks for the institutions,” the IMF said.

“Ultimately, it is about ensuring that a significant and potentially contentious innovation is in line with a central bank’s mandate. Otherwise, the door is opened to potential political and legal challenges.”

A further challenge for CBDC is to achieve ‘legal tender’ status, said the IMF authors.

Legal tender—meaning that creditors cannot refuse that form of money in payment of a debt—is a prerequisite for CBDC to obtain the status of currency, the IMF said.

“Legal tender status is usually only given to means of payment that can be easily received and used by the majority of the population,” the IMF said.

“That is why banknotes and coins are the most common form of currency.”

Here, there are formidable infrastructure requirements to overcome for CBDCs to achieve equivalent status to traditional currency, said the IMF.

“To use digital currencies, digital infrastructure—laptops, smartphones, connectivity—must first be in place. But governments cannot impose on their citizens to have it, so granting legal tender status to a central bank digital instrument might be challenging,” it said.

“The digital space might become ‘populated’ by private alternatives”

However, governments and central banks are caught in a bind when it comes to the introduction of CBDC, the IMF suggested: if they launch it without proper legal foundations they incur significant risks, but if they delay launching it, other unregulated private sector alternatives might fill the gap.

“In the absence of a clear response, the monetary system will struggle to adopt CBDC widely and the digital space might become ‘populated’ by private alternatives,” the authors of the IMF paper said.

Some say that private sector ‘cryptodollars’ may already be performing the role of digital substitutes for state money.

CBDCs raise a host of other thorny legal questions, the IMF went on in its new paper.

“The creation of CBDCs will also raise legal issues in many other areas, including tax, property, contracts, and insolvency laws, payments systems, privacy and data protection and, most fundamentally, preventing money laundering and terrorism financing,” the IMF said.

“If they are to be ‘the next milestone in the evolution of money’, CBDCs need robust legal foundations that ensure smooth integration to the financial system, credibility and broad acceptance by countries’ citizens and economic agents,” it said.


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