The Central Bank Of Nigeria Bans All Cryptocurrency Trade

The Central Bank of Nigeria (CBN) has prohibited all financial institutions in the country from operating in cryptocurrencies claiming that the digital currency is used for money laundering and terrorism.

The Apex Bank stated this in a notice released on Friday, which also ordered banks to close the accounts of any persons or entities found making any cryptocurrency transaction or operating a cryptocurrency exchange.

The CBN addressed the directive to Deposit Money Banks, Non-bank financial institutions, other financial institutions, and the public, alluding to the risks involved in cryptocurrency.

According to the notice published on the Central Bank’s website and sent to the institutions, failure to comply with the directive will result in “severe regulatory sanctions.”

The country’s Securities and Exchange Commission said in September it would regulate trade in digital currencies to provide protection for investors and to ensure that transactions are transparent.

The CBN referenced its notice from 2017 that warned people and businesses about the risks involved with trading cryptocurrencies. Then, it told banks not to offer any crypto.

However, the regulator did not prevent crypto platforms from making use of banking and payment channels. It only demanded that crypto exchanges meet Know-your-customer (KYC) and Anti-money laundering (AML) requirements that would enable them to meet customer identification, verification, and transaction monitoring requirements.

Most importantly, the concern of the CBN’s 2017 notice was that cryptos like Bitcoin, Ripples, Ethereum were not legal tender, and any bank that performs any crypto transaction does so at its own risk.

However, in the recent notice by the CBN, that decision is basically being removed out of the bank’s hands.

Senator Iheyen, Lead Partner at Infusion Lawyers, and President for Stakeholders in Blockchain Technology Association of Nigeria (SiBAN) states that if the CBN planned to develop this kind of measure, one would expect them to carry industry players along, and express their concerns.

“We just saw the publication from nowhere, and within the first one hour, we were trying to verify if it was authentic. It was not even on the CBN website before we knew it, they uploaded, removed, changed it, and re-uploaded it again. Possibly due to a typo, they made in the first circular,” he says.

The tough stance by the Central Bank of Africa’s largest economy comes after protests in October against the excesses of the police’s Special Anti-Robbery Squad, known as SARS, which saw organizers accepting Bitcoins for funding after the government allegedly blocked local payment platforms for collecting donations.