CBN Orders Banks To Close All Accounts Transacting In Cryptocurrency

The Central Bank of Nigeria (CBN) yesterday ordered banks and other financial institutions to identify persons and entities operating cryptocurrency exchanges and close all such accounts.

The order, which was contained in a circular to banks and other financial institutions signed by the director of banking supervision, Bello Hassan, is expected to take effect immediately.

Citing the risks associated with transactions in cryptocurrency, the CBN, in the circular, said it “wishes to remind regulated institutions that dealing in crypto currencies or facilitating payments for cryptocurrency exchanges is prohibited”.

The apex bank added: “The Central Bank of Nigeria 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 and members of the public on the risk associated with transactions in cryptocurrency refers.

“Further to earlier regulatory directions on the subject, the bank hereby wishes to remind regulated institutions dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.

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“Accordingly, all DMB’s NBFI’s or OFI’s 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.

“Please, note that breaches of this directive will attract severe regulatory sanctions. This letter is with immediate effect”.

However, Nigerians took to social media to protest the order by the CBN, saying the move was one that would drag the country backwards.

According to Twitter users, Nigeria as one of African countries with a huge crypto following is being dragged down by policies.

Many crypto traders on the platform said they had received calls and warnings from their banks to stop trading in cryptocurrency or have their accounts flagged and barred if they continue to carry on cryptotrading.

A Start-up CEO who craved anonymity explained that in Nigeria, cryptocurrency and foreign exchange are two dynamics that ought to be taken seriously.

He said rather than ban crypto trading in the country, the CBN ought to look at ways in which it can work around regulating it.

Noting that cryptocurrency is not going to go away, he said, “Naira is on a downturn shitshow fall off and I literally want to pay for things in the US and I can’t. There is dollar in my account but the US company cannot take it and I can’t transfer it to them. My company is in the process of registering with an international operator so that we can pay them in naira and they can pay for our services in the US in dollars.

“This is a problem that is not going to go away. It is not about just banning and cutting things off but getting in front of the problem in a constructive way. Looking at what other countries are doing in China and the US, they are all trying to have a stable coin and cryptocurrency in one form or the other. So the earlier we get these things in check the better it will be for us.

“I understand the concerns of the CBN around KYC and fraud and security but there are legitimate purposes for which FX and now cryptocurrencies are being used. We are in a global world so the earlier we get these things and stop random cancellation the better.”