The Central Bank of Nigeria, CBN, has cautioned commercial banks and all non-banking financial institutions to stop dealing in cryptocurrencies and other related transactions.
Nigeria's apex bank further ordered banks to close all the accounts of customers transacting and dealing in Bitcoin immediately.
The information was contained in a statement released by the CBN on Friday, February 5, 2021.
In October last year, at the height of the #EndSARS protests, the bank restricted some financial institutions from receiving or making crypto payments.
The restricted accounts belonged to predominantly young Nigerians who had either sent or received funds to run the #EndSARS protests. When the major fundraisers, Feminist Coalition, were blocked, a bitcoin wallet was set up which donors used to pour in support from across the world.
The CBN was helpless at blocking the inflow due to cryptocurrencies being run on decentralised monetary systems that no conventional regulator can restrain.
In the past few weeks, trading in Bitcoin and other cryptocurrencies has skyrocketed as the global economy becomes increasingly volatile. Nigerians have started utilising crypto transactions to avoid the numerous challenges faced with traditional money transfer services.
In 2020, crypto marketplace Paxful reported that Nigeria had the world’s second-largest Bitcoin by trading volume. In the last five years, Nigerians have traded 60,215 Bitcoins, or more than $566 million USD, it was reported.
In 2017, CBN said it would not licence cryptocurrencies such as Bitcoin, Ripples, Monero, Litecoin, Dogecoin, Onecoin, amongst others, and any transactions conducted through them would not have the protection of the Nigerian law
“The Central Bank of Nigeria’s (CBN) circular of January 12, 2017 ref: FPR/DIR/GEN/CIR/06/010 which cautioned Deposit Money Banks (DMBs), Non-Bank Financial Institutions (NBFIs), Other Financial Institutions (OFIs) and members of the public on the risk associated with transactions in cryptocurrency refers,” CBN said.
“Further to earlier regulatory directives on the subject, the bank hereby wishes to remind regulated institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.
“Accordingly, all DMBs, NBFIs and OFIs are directed to identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.”
The bank also warned that it would punish offenders that violate the information.
“Please note that breaches of this directive will attract severe regulatory sanctions.
“This letter is with immediate effect,” it said.
Reviewed by Okenwa Chinedu
on
February 05, 2021
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