Nigeria Puts a Ban on Cryptocurrency and Crypto Accounts

The Central Bank of Nigeria (CBN) last week ordered all banks to close accounts dealing with cryptocurrencies. Banks and financial institutions were directed to identify customers dealing in cryptocurrency and to ensure that such crypto accounts were immediately closed.

In response to the ban, Binance, a platform for crypto trading and automated payment apps like Bundle ceased deposits and their activities. Crypto users in Nigeria took to social media to show their anger, disapproval, annoyance and frustration, following the ban.

The ban was a reminder for all Nigeria-based regulated banking/financial institutions that trade in cryptocurrency was prohibited in the country.

Recently, CBN clarified in a statement that the warning to the banks to cease all crypto accounts was not a new imposition. The ban was a reiteration of the fact that dealing in cryptocurrency or operating crypto exchanges on platforms was an already prohibited activity.

In furtherance of the ban, CBN issued a five-page statement clarifying that the ban wasn’t sudden, but reinforcement of its 2017 position. The statement for the press was signed by OsitaNwanisobi, who is the director of Corporate Communications.

The statement went on to explain that all banks had already been forbidden to use/hold/transact/trade-in cryptocurrencies vide a circular dated 12.01.2017.

Reportedly, in the statement, there was a reference to other countries that had banned its financial institutions from trading in cryptocurrency. It made claims that china had completely banned crypto trade or exchange.

However for the uninitiated, though China has imposed many limitations on crypto users and exchanges, nonetheless it has never entirely banned cryptocurrency.

The statement called out the unregulated and unlicensed entities that were issuing cryptocurrencies. It called the crypto assets as a danger to Nigerian users for being volatile speculative assets.

Furthermore, the statement also said that cryptocurrencies by their very nature and name suggested its users valued secrecy, privacy and concealment etc.

CBN went on to assure that this stance on cryptocurrency would not hamper the progress of the financial technology industry. It added that the directive was the need of the hour to protect citizens from the inherent risk of crypto assets transactions.

The statement said, in effect, that since the cryptocurrency was largely anonymous, speculative, and untraceable, it was being used to perform criminal activities. The Statement went on to give examples of two such criminal activities that were very common – money laundering and terrorism financing.

The statement also threw light on the great threat crypto was to small retail and unsophisticated investors, who would lose a lot.

In conclusion, it was reiterated that CBN was not comfortable with cryptocurrency at this time in light of the aforesaid reasons. The statement echoed that CBN would take all measures to stop people from using the digital currency to protect its financial system.

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