Financial experts on Monday spoke on the Central Bank of Nigeria’s (CBN’s) ban on cryptocurrencies. They believe it would likely trigger more activities in the nation’s stock market. They said this while speaking to agency reporters.
InvestData Limited Chief Operating Officer, Ambrose Omordion, said the ban would trigger flow of funds to the equities market in search of higher returns and would also support market rebound as earnings season for 2020 financial result would start trickling in.
His words: “The ban on cryptocurrency will trigger circular flow of funds searching for a better return as the equity market today is ahead of year-on-year headline inflation.
“The market is expected to rebound in the new week on earnings season kicking off with early fliers that will come with dividend report.
“We advise that you target dividend-paying stocks and fundamentally sound companies with growth prospect in 2021, especially given the low interest rates regime and sustained oil price rally that have so far supported the economy and equity market.”
Also speaking, Prof. Uche Uwaleke, President, Association of Capital Market Academics of Nigeria, said the ban would boost investors’ confidence in the equity market.
Uwaleke urged the CBN and the Securities and Exchange Commission (SEC) to come up with a regulatory framework for cryptocurrency asset trading in Nigeria.
“Given that cryptos have come to stay, the CBN and the SEC should come up with a regulatory framework for crypto asset trading in Nigeria.
“Given the weighty nature of the directive, I want to believe that the CBN must have consulted relevant stakeholders including the Bankers Committee before taking the decision.
“I am inclined to believe that it was well thought through and not a unilateral decision.
The fact is that what the CBN could see in a squatting position, many cannot see standing.
“So, I think the directive should be seen in the light of this fact that the CBN may have information which may not be available to the public,” Uwaleke said.
He recalled that not too long ago at some point, China, widely seen as the home of cryptocurrencies, had to ban trading in bitcoins.
It will be recalled that the apex bank in a press statement on Feb. 7 directed the Deposit Money Banks and other financial institutions to desist from transacting in and with entities dealing in cryptocurrencies.