Oluchi Chibuzor writes on the ban of cryptocurrency transactions in Nigeria’s banking and payment systems
The Central Bank of Nigeria (CBN) recently directed banks and other financial institutions to close any accounts dealing in cryptocurrency or facilitating payment for cryptocurrency exchange, with immediate effect.
It also directed banks to expose any individual and entity running such accounts, warning that failure to adhere to the directives would attract strict sanctions.
The apex bank in the circular, cautioned deposit money banks (DMBs), non-bank financial institutions (NBFIs) and other financial institutions (OFIs) and members of the public on the risk associated with transactions in cryptocurrency.
The East African
Wednesday February 10 2021
Gold plated souvenir Bitcoin coins arranged for a photograph in London on November 20, 2017. PHOTO | AFP
Summary
The bank on Sunday explained that many other countries, investors and economists have warned against cryptocurrencies because of the “significant risks” in transactions.
Cryptocurrencies, it said, are issued by unregulated and unlicensed entities and are therefore against CBN Act (2007).
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The Central Bank of Nigeria (CBN) has ignored the uproar over a crackdown on cryptocurrencies, giving several reasons for the move, ordering investigations and blocking all the accounts of companies trading in them.
The apex bank on February 5 joined countries that have outlawed cryptocurrencies, asking banks and financial institutions to close accounts.
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Exchanges and investors in cryptocurrencies have started reviewing their business strategies as the Central Bank of Nigeria (CBN) sticks to its gun, saying its restriction of transaction in the digital assets is in the interest of the country and parties involved.
Nigerian investors across coin exchange platforms are cashing out to hold until they fully understand how the CBN’s directive would affect them, just as the platforms urged them to switch to card deposits as they equally monitor the new regulation.
In an extensive engagement, yesterday, former deputy governor of the apex bank, Prof. Kingsley Moghalu, disagreed with the CBN, saying there are better ways to regulate than adopting a “knee-jerk” approach. Moghalu, who was part of the CBN team that initiated the Bank Verification Number (BVN) and other inno
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The Central Bank of Nigeria has said cryptocurrencies promote illegal activities and raise risks, among other reasons.
It said this on Sunday in a statement regarding various comments and reactions following its recent reminder to Deposit Money Banks to desist from transacting in/and with entities dealing in cryptocurrencies.
The CBN stated, “The recent regulatory directive became necessary to protect the financial system and the generality of Nigerians (including the youth population) from the risks inherent in crypto assets transactions, which have escalated in recent times, with dire consequences for the integrity of the financial system and financial stability.