Prof Osinbajo demands knowledge-based regulation of blockchain tech, not a proscription

Prof Yemi Osinbajo, Vice President, the Federal Republic of Nigeria

The Vice President, Prof Yemi Osinbajo, has demanded a robust regulatory regime that is issued from a deep thought process that should be knowledge-based on cryptocurrencies transactions and not acting by fiat and out of fear.

Osinbajo said that rather than adopt a policy that prohibited cryptocurrency operations in the country, regulators must act with knowledge and not fear.

Osinbajo’s spokesman, Laolu Akande, in a statement on Friday in Abuja, said the vice president virtually-delivered a keynote address at a one-day economic summit.

The summit was organized by the Central Bank of Nigeria (CBN), the Banker’s Committee, and the Vanguard Newspaper, themed “Bankers’ Initiative for Economic Growth”.

“I fully appreciate the strong position of the CBN, Securities and Exchange Commission (SEC) and some of the anti-corruption agencies on the possible abuses of cryptocurrencies and their other well-articulated concerns.
But I believe that their position should be the subject of further reflection.
“There is a role for regulation here. And it is in the place of both our monetary authorities and SEC to provide a robust regulatory regime that addresses these serious concerns without killing the goose that might lay the golden eggs.

“So it should be thoughtful and knowledge-based regulation not prohibition; the point I am making is that some of the exciting developments we see, calls for prudence and care in adopting them, but we must act with knowledge and not fear.”

Osinbajo said that there was no question that blockchain technology generally and cryptocurrencies, in particular, would soon challenge traditional banking, including reserve (Central) banking, in unimaginable ways.

According to him, there is a need to be prepared for that seismic shift as it may come sooner than later.

“Already remittance systems are being challenged; blockchain technology will provide far cheaper options to the kind of fees being paid today for cross-border transfers.

“I am sure you are all aware of the challenge that the traditional SWIFT system is facing from new systems like Ripple which is based on the blockchain distributed ledger technology with its own crypto tokens.

“There are, of course, a whole range of digital assets spawned daily from block-chain technology. Decentralized finance, using smart contracts to create financial instruments, in place of central financial intermediaries such as banks or brokerages is set to challenge traditional finance.

“The likes of Nexo finance offer instant loans using cryptocurrency as collateral; some reserve banks are investigating issuing their own digital currencies.”

On national development and the public and private sector interventions, the vice president emphasised that in order to engender sustained economic growth, stakeholders must think in terms of scale.

He said he was quite concerned that national interventions were classified as pilots involving sometimes no more than 1000 people.

“Given the size of our population, we cannot afford the luxury of pilot projects; we should design our interventions very carefully and then go big.
“It was quite puzzling to me when people said that our plan to build 300,000 houses under the Economic Sustainability Plan(ESP) was too ambitious a target.

“After all, these just amounts to 400 houses per local government yet many of our local governments are larger than some African countries who would not consider building 400 houses in one year as too onerous a task.

“The task of national development requires that we fire on all cylinders after all, at one stage, China was building 1.9 million housing units per year over a number of years,” he said.

He said that the Federal Government had a track record of building roads, rail and power projects across the country.

Osinbajo said that in spite of the commitment so far, the nation was still very far away from meeting the full infrastructural needs of its economy.

The Vice President called for improved support especially from the private sector in the operationalization of the Infrastructure Company (InfraCo).

On the country’s recovery from its second recession in four years, Osinbajo said policymakers, lawmakers and business leaders had cause to cheer the relatively good performance in the face of the negative impact of the COVID-19 pandemic.

He attributed successes recorded to the early actions of the Federal Government in providing an initial stimulus and then, constituting the Economic Sustainability Committee and the ESP

Participants at the forum included the Governor of Lagos State, Mr Babajide Sanwo-Olu and CBN Governor, Mr Godwin Emefiele

Others were representatives of the Minister of Finance, Budget and National Planning, the Founder of Vanguard Newspaper, Mr Sam Amuka-Pemu, several banking executives, among others.

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