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“The CBN has unwittingly facilitated the creation of a new ecosystem built without Nigerian Banks, robbing the nation of direct foreign investments.”
The world’s biggest manufacturer of electric vehicles, Tesla on Monday acquired $1.5 billion worth of bitcoin pushing the price of the cryptocurrency to a record-high of over $44,000.
It is the largest investment in a cryptocurrency by any vehicle manufacturer and represents a significant percentage of Tesla’s cash in the investment. The company had more than $19 billion in cash and cash equivalents on hand at the end of 2020. The acquisition which was contained in a filing with the Securities and Exchange Commission is according to the company for “more flexibility to further diversify and maximise returns on our cash.”
The move is coming barely days after the financial market regulator in Africa’s most populated country, the Central Bank of Nigeria gave matching orders to deposit money banks, non-banks, and other financial institutions not to have any dealings with businesses in the cryptocurrency space including exchanges. The apex bank also instructed the financial institutions to close the accounts of the exchanges, a situation that has created panic in the country adjudged to be the largest on the continent and second in the world in terms of peer-to-peer transactions.
The CBN later justified its decision in a statement on Sunday claiming that the opacity of cryptocurrency and the risks of money laundering, terrorism financing were responsible for different levels of restrictions placed on it in countries like China, Canada, Taiwan, Indonesia, Algeria, Egypt, Morocco, Bolivia, Kyrgyzstan, Ecuador, Saudi Arabia, Jordan, Iran, Bangladesh, Nepal, and Cambodia.
The CBN, however, failed to acknowledge that more advanced countries like Japan, South Korea, Switzerland, Singapore, Portugal, the USA, UK, Canada, Australia, and France have all taken a position approach to regulate the market. Germany had also recognised bitcoin as a means of payment in 2018. China is also on the verge of becoming the first country in the world to issue a Central Bank Digital Currency (CBDC), a project it has been working on since 2018.
“All you have done is facilitate the creation of a new ecosystem built without Nigerian banks. Unless the internet is banned, the money will be transferred to and from location and person. A better approach would be to allow banks to own this and institute KYC rules and attract foreign direct investment,” Kalu Aja, a personal finance expert said on Twitter.
With the acquisition, Tesla joins a growing number of global organisation integrating cryptocurrencies in their operations. After PayPal in 2020, the world’s largest payment company announced that it would no allow its users to buy and sell bitcoin using its platform, Visa, a one time enemy of the bitcoin community said in February 2021 has it has partnered with 35 cryptocurrency platforms and would be helping banks roll out bitcoin and cryptocurrency buying and trading services with a Visa crypto software program, set to launch later this year.
It should be noted however that Elon Musk, the founder of Tesla and the richest man in the world is a huge fan of the cryptocurrency market. On January 29, a profile update by Must which spotted the bitcoin hashtag was responsible for sending the price of the largest cryptocurrency by valuation on a bull run. Following the update, the price of bitcoin jumped to over $37,000 representing about a 10.2 percent rise in less than one hour.
The Tesla acquisition announcement on Monday sent bitcoin prices o new highs reaching at least $44,22. Tesla shares also rose more than 2.5 percent in premarket trading. Tesla warned investors of the volatility of bitcoin’s price in its SEC filing.
