The Central Bank of Nigeria (CBN) issued a five-page statement on Sunday clarifying its position on cryptocurrencies after an official warning to local banking institutions sparked shock waves over social media on Friday.
In Sunday’s statement, the CBN said Friday’s letter was just a reminder that cryptocurrencies were not legal tender in Nigeria and reiterated a position the bank has held since 2017 without imposing any new restrictions on the industry.
“It is important to clarify that the CBN circular of February 5, 2021 did not impose any new restrictions on cryptocurrencies, as all banks in the country had previously been banned by the CBN circular of January 12, 2017 from not using them keep trading and / or transactions in cryptocurrencies, ”the statement said.
The CBN sent a letter to local financial institutions on Friday ordering them to close all bank accounts associated with cryptocurrency trading platforms. In response to the letter, the crypto trading platform Binance and local electronic payment apps like Bundle stopped deposits. Disgruntled Nigerian crypto users took to Twitter and other social media platforms to express their displeasure.
Osita Nwanisobi, Ag. The director of corporate communications lists other countries that have banned their banks from trading cryptocurrencies, and claims that in China “cryptocurrencies are completely banned and all exchanges are also closed”.
It is also said that cryptocurrencies are issued by “unregulated and unlicensed” companies and that crypto assets are volatile speculative assets that can pose a threat to Nigerian users.
“The name and nature of the ‘cryptocurrencies’ suggest that their customers and users value anonymity, obscurity and obfuscation,” the statement said.
In the letter, the CBN assured that this stance would not hinder the progress of the fintech sector in the country or its payment ecosystems. The directive had become necessary to protect Nigerians, including their youth, from the risks associated with transactions in crypto assets.
“Due to the fact that cryptocurrencies are largely speculative, anonymous and non-traceable, they are increasingly being used for money laundering, terrorist financing and other criminal activities,” the statement said.
The letter also noted that the high volatility of crypto assets poses a major threat to “small retail investors and non-sophisticated investors” who may lose a lot.
“In view of these realities and analyzes, the CBN currently has no comfort in cryptocurrencies. It will continue to do everything within its regulatory powers to educate Nigerians to refrain from using them and to protect our financial system from the activities of fraudsters and speculators, ”the statement said.
Read CBN’s full statement below:
