The Central Bank of Nigeria (CBN) issued a five-page statement recently clarifying its position on cryptocurrencies after a regulatory warning to local banking institutions on Friday sent shockwaves through social media.
The CBN sent a letter to local financial institutions on Friday, ordering them to shut down all bank accounts associated with cryptocurrency trading platforms. In response to the letter, crypto trading platform, Binance and local electronic payment apps like Bundle halted deposits.
The Central Bank of Nigeria (CBN) says it will continue to do all within its regulatory powers to educate Nigerians to desist from use of cryptocurrencies despite growing criticism.
In a statement, the Bank said it is determined to protect the country’s financial system from activities of “fraudsters and speculators”.
Its directive to banks to close accounts of persons or entities involved in cryptocurrency transactions has been criticised, with former vice-president, Atiku Abubakar, music celebrity, Davido and many others, asking the bank to rescind the decision.
The CBN said Friday’s letter was only a reminder that cryptocurrencies were not legal tender in Nigeria, and was reiterating a position the bank has held since 2017, not imposing new restrictions on the industry.
“It is important to clarify that the CBN circular of February 5, 2021 did not place any new restrictions on cryptocurrencies, given that all banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies,” the statement said.
Listing various reasons for its action, the central bank said not only are cryptocurrencies issued by unregulated and unlicensed entities, the patrons and users value “anonymity, obscurity, and concealment” and there are risks of “loss of investments, money laundering, terrorism financing, illicit fund flows and criminal activities”.
China, Canada, Taiwan, Indonesia, Algeria, Egypt, Morocco, Bolivia, Kyrgyzstan, Ecuador, Saudi Arabia, Jordan, Iran, Bangladesh, Nepal and Cambodia have all placed certain level of restrictions on financial institutions facilitating cryptocurrency transactions, the bank said in the statement signed by Osita Nwanisobi, its Acting Director of corporate communications.