This is a blog copy of the 68th version of our weekly newsletter, BD Insider. Subscribers get to read it first and can take action based it. You can subscribe here.
Regardless of how your weekend went, we want you to know that we love you and appreciate you reading our love letters every week. We have included a gift at the end of this newsletter because you are our valentine.
This week, we will be looking at:
- How crypto companies are finding solutions to the CBN brouhaha.
- The SEC backing CBN's decision.
- Banks closing the accounts of people who traded crypto.
- What NGNT is; and
- How Moyalo is making Ajo/Esusu digital
Let's dive in... 😎
₿ Crypto companies find solutions for deposits
As you most likely know, following the CBN's announcement on February 5, all crypto companies active in Nigeria disabled deposit functions. This was important as, due to the central bank's order, people could no longer fund their accounts with crypto exchanges. Withdrawals were also affected and became much slower.
However, barely a week since the CBN's draconian policy was implemented, crypto companies have started to find creative ways out.
As expected, most companies are pivoting to peer-to-peer (P2P) to make transactions possible again. So far, Roqqu, BuyCoins, and Binance have announced different P2P mechanisms to allow users to resume regular transactions.
Bitnob, another crypto company, is also experimenting with using Ovarr, a dollar e-voucher as a deposit option for accounts.
Other crypto exchanges like Quidax and Bushahub have also hinted that they are working on similar solutions to be announced this week.
🤝🏽 Nigeria's SEC backs CBN's decision
After the Central Bank of Nigeria announced its enforcement of sanctions against cryptocurrency transactions, stakeholders pointed out that it contradicted the stance of the country's Securities Exchange Commission (SEC).
For those that aren't already aware, both bodies are independent apex regulators of different aspects of the Nigerian financial market. While the CBN is responsible for fiscal and monetary policies, the SEC handles capital market regulations.
The SEC via a press release in September 2020, had announced that it recognised all virtual crypto assets (including cryptocurrencies) as securities and was working on regulating how they are traded. This seemed contradictory to the CBN, which did all but criminalise the ownership and use of cryptocurrencies in the first week of February.
Although the SEC denied any contradiction between its previous release and the CBN's current stance, it appeared to backtrack its decision to recognise cryptocurrencies as legal securities. The SEC went further to put a hold on admitting crypto companies into its sandbox, which it had already set plans in motion for.
The release from the SEC appeared to be a closing of ranks between the two regulatory agencies. While both bodies should be independent of one another, the recent press release shows that may not be the case. It could also indicate that the decision to ban crypto trading came from higher up the authority chain.
🚫 Banks reportedly close accounts of people trading crypto
The most dreaded part of the CBN's February 5 press release was where it instructed financial institutions to identify people and organisations that traded cryptocurrencies and close their accounts. The ambiguous nature of the instruction meant people didn't know who would be targeted.
At first, it seemed it would only be crypto exchanges since they appeared to be the target of the CBN's instructions. The exchanges reportedly moved their funds from local banks within hours of the announcement.
However, throughout last week, several Twitter users complained about having their accounts closed by their banks due to crypto transactions they had executed in the past. The legality of this move has been questioned as people are being punished retroactively for activities that were legal at the time. Some might even argue that the activities are still legal now; after all, the Central Bank has not criminalised cryptocurrencies.
So far, banks that have reportedly closed accounts include:
You will recall that Nigerian banks have a terrible reputation for their customer relations. During the #ENDSARS protests, many banks were silent, not offering even a tweet in support of the fight against police brutality. They also hurriedly froze the accounts of some prominent faces from the protests following an order from the CBN. That order was overturned last week.
It is instructional that although these banks are some of Nigeria's biggest and most influential private sector entities, they would rather side with draconian government policies than fight them side-by-side with the people.
🍪 Bonus: What is NGNT, and why is it important?
Dear BD Insider, there's something brewing, and you should know.
You might have come across NGNT on social media or heard your friends talking about it. It has been touted as a possible workaround for crypto companies after the CBN ban. So, what exactly is NGNT?
NGNT was created in December 2019 by Token Mint in partnership with BuyCoins and some other crypto companies. It is a naira-backed stable coin pegged to the naira at a 1:1 ratio. That means one NGNT is equal to one Naira at all times.
It functions similarly to other stablecoins like USDT and USDC in that it is an alternative to storing and sending money using the naira.
What makes NGNT unique is that it is cryptocurrency. It was built on the Ethereum network and is issued by two major organisations: Token Mint and Cowrie Exchange.
Although NGNT is not legal tender, it can be useful for people looking to buy crypto with naira. People can purchase it via P2P for an equivalent amount of naira. Once they have the NGNT in their wallets, they can then use it to buy other cryptos on their preferred exchanges.
As of today, NGNT can be traded on:
- Binance; and
Other crypto exchanges like Bundle Africa are expected to complete their integration with NGNT in the next few weeks. Watch out for the announcements.
Typically, stablecoins are collateralized in the currency they are pegged. What that means is that for every USDC in circulation, there is an equivalent amount of USD in an account somewhere. However, following CBN's policy, that is no longer possible. So, the issuers of NGNT have had to collateralise it with USDC, the world's most popular stablecoin.
Something-you-should-know: The total supply of NGNT in circulation is worth approximately N133 million. The figure is a 1,109% increase from the amount of NGNT in circulation last year.
💳 Moyalo — the Nigerian fintech looking to revolutionise savings
Remember the Ajo and Esusu our parents did? Well, we may soon be doing it from our phones too.
Moyalo is a Nigerian startup looking to blend community and savings. In a reimagining of the regular thrift contribution model, Moyalo allows Nigerians to save together in small groups to achieve short-term savings goals.
Basically, users pay installments into a mutual pot and can choose when to withdraw. The startup aims to help people avoid debt and high-interest rates by digitising rotational savings. It provides a platform for friends, cooperative societies, and families looking to contribute towards a single goal.
Although the startup was recently launched, it has already attracted over 8000 users and processed over N100 million in transactions.
Here are some of the recent startup fundraises across Africa that you should be aware of:
- Connected Analytics, the parent company of ThankUCash, has announced a 7-figure seed round.
- Ghanaian startup, Stars From All Nations (SFAN) raised $250,000 pre-seed funding.
- Dileny Technologies LLC, an Egyptian healthtech company has raised $150,000 in non-equity funding.
- Kenyan Startup, Popote raise an undisclosed amount from Lagos-based investors, Greenhouse Capital.
- Pngme, a US-based but African-focused financial data platform, raised $3 million for its seed round.
Tip: If you're looking to improve your take-home (salary) by moving jobs, companies that have just raised are a great place to apply. Companies almost always hire after a significant raise.
📰 Things we found interesting
Here are some of the most exciting stories we've written and read over the last seven days:
- Legal Trunk set to provide startups with low-cost, high-quality legal support.
- Argyle raised $20 million in funding using a pitchdeck they built with Notion.
- Ventures Park and the evolution of co-working spaces in Nigeria.
- Is Lagos state an anti-business state?
- Jobberman Nigeria has a new CEO - Rolake Rosiji.
- Mastercard will support crypto payments for merchants this year.
- Jack Dorsey and Jay Z collaborate to make Bitcoin the internet's currency.
🚪 Jobs and Opportunities
In addition to last week's list of jobs, events, and other opportunities, check these out too:
- Techadvance is hiring for several engineering roles.
- Akvo is looking to hire a developer from West Africa
- Anakle is hiring two developer interns
🙏 Thanks for reading
Hope this newsletter was helpful. Reach me directly by replying this email.