NDIC: Nigeria’ll Monitor Digital Currency Risks
The Nigeria Deposit Insurance Corporation has said Nigeria is interested in developing a digital currency but will monitor the risks associated with it.
The Deputy Director, Research Department, NDIC, Kabir Katata, stated this while speaking on the ‘evolution of virtual currency.’
He said, “Banks and government agencies are already exploring how blockchain might transform their approaches to operations.
“Nigerian regulators and players are actively involved in DCs and DTLs, as desired. We should continue to monitor developments in digital currency so as to resolve any concern on legal, financial and consumer protection.”
According to him, some of the DCs include bitcoin, litecoin ripple, dogecoin, and peercoin, among others.
Katata said that blockchain was the name of the tracking database underlying the digital currency, bitcoin, now used broadly to refer to any distributed electronic ledger that uses software algorithms to record transactions with reliability and anonymity.
“Bitcoin is the most prominent of those cryptocurrencies, and the most well-known application of blockchain,” he said.
Katata explained that DLT referred to a family of technologies “that use a distributed group of participants to maintain a shared, replicated and synchronised record, without reliance on a single central party or centralised data storage.”
He said, “Regulators in the financial sector are showing concerns over the risks that are associated with the digital currencies, which is a new phenomenon in many financial institutions.
“Digital currencies, though a new phenomenon, is gaining popularity across the globe and are associated with a lot of risks. That is why regulatory/supervisory authorities in many countries are seriously concerned about DCs.”
According to him, some of the associated risks have far-reaching implications for deposit insurance, banking and legal practice.
“Digital currency does not pose global financial stability risks, but they raise other significant concerns, including consumer and investor protection, market integrity and money laundering/ terrorism financing, among others.
“Blockchain, the technology that powers DCs, has economic, political, humanitarian, and legal system benefits and could have the capacity for reconfiguring all aspects of the society and its operations,” he added.
