The Deposit Insurance Corporation in Nigeria (NDIC) is in charge of overseeing federal insurance and acts as a provider of safety nets. On July 25, the NDIC released a warning to the public about relying too heavily on transactions based in cryptocurrency. This comes at a time when the use of cryptocurrency is increasing throughout Africa and the rest of the world. In fact, many countries have already taken protections against these growing, unofficial forms of currency.
In the press release, Umaru Ibrahim, the CEO and managing director of the NDIC stated that relying too much on cryptocurrencies incurs some risk due to their lack of regulation and lack of backing by large, central banks in a vast majority of financial jurisdictions.
The NDIC works much like the Federal Deposit Insurance Corporation of the United States. The NDIC seeks to create a safety net for people who make investments and deposits within the banking system of the country. This is accomplished by protecting the entire system of banking from any instability that could be caused by a loss of confidence or a bank run.
Part of this process is keeping the public aware of any alternative forms of currency that could cause them financial trouble in the future. According to the NDIC, cryptocurrencies pose a potential threat that fits this description.
The House Speaker Addresses Need for Regulation on Cryptocurrencies
Ibrahim first voiced his reservations during a call with the NDIC's board. According to a news report by Ripple Nigeria, the Speaker of the House of Representatives was present in the meeting that took place on July 25.
Femi Gbajabiamila, the speaker, was actively pushing to put regulations in place regarding cryptocurrencies in order to take part in the global market. The speaker mentioned that the prevalence of cryptocurrencies is growing in the global market and cannot be ignored.
As Cointelegraph has reported previously, Gbajabiamila has also talked about the critical differences between the Central Bank of Nigeria and the NDIC. Gbajabiamila also mentioned that the house would help the NDIC with growing various functions without overstepping its boundaries and impeding on the domain of the central bank.