As the Central Bank of Nigeria prohibits trading of cryptocurrency in the country, there is a likelihood that the digital exchange will continue to be traded and persons involved unaffected.
The CBN had in a circular, on Friday, said, “Dealing in crypto currencies or facilitating payments for cryptocurrency exchanges is prohibited.”
As a result, it further directed all Deposit Money Banks and other financial institutions to immediately close all accounts associated with cryptocurrency trading in the country.
In defence of this pronouncement, the apex bank, on Sunday, issued a detailed statement entitled ‘Response to Regulatory Directive on Cryptocurrencies’ to clarify its position and directive.
According to the statement signed by the bank’s Acting Director, Corporate Communications, Osita Nwanisobi, CBN said its position on cryptocurrencies was not an outlier, but that the use of cryptocurrency in Nigeria “goes against the key mandates of the bank,” as enshrined in the CBN Act (2007).
“As regards our recent policy pronouncement, it is important to clarify that the CBN’s circular of February 5, 2021 did not place any new restrictions on cryptocurrencies, given that all banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies.
“It is also important to note that the CBN’s position on cryptocurrencies is not an outlier, as many countries, central banks, international financial institutions, and distinguished investors and economists have also warned against its use,” he noted.
Also, according to him, there is a critical difference between a central bank-issued digital currency and cryptocurrencies.
He said, “As the names imply, while central banks can issue digital currencies, cryptocurrencies are issued by unknown and unregulated entities.
“At this juncture, the CBN would like to assert that our actions are not in any way, shape or form inimical to the development of fintech or a technology-driven payment system. To the contrary, the Nigerian payment system has evolved significantly over the last decade, leapfrogging many of its counterparts in emerging, frontier and advanced economies propelled by reforms driven by the CBN.”
Nwanisobi, then added that in light of these realities and analyses, the “CBN has no comfort in cryptocurrencies at this time and will continue to do all within its regulatory powers to educate Nigerians to desist from its use and protect our financial system from activities of fraudsters and speculators.”
However, in a statement on Monday to Financial Street, the Chief Executive Officer of Swift eCurrency, Adelola Sokoya, said neither the CBN nor any government could ban bitcoin and cryptocurrency.
He said, “Countries with more sophisticated financial muscle like the United States have tried it too and failed.”
Rather, what CBN did was not to ban bitcoin but to tell banks to stop any cryptocurrency transactions, the crypto merchant stated.
“They asked banks to stop every cryptocurrency transaction that has been carried out by bitcoin in Nigeria. If you are an active bitcoin trader, you will notice that exchanges like binance have stopped to honour naira funding.
“The funny thing about all of this is that long before exchanges start using banks, crypto traders have been using other means to trade called peer-to-peer,” Sokoya explained.
He added that CBN’s threats would not affect persons dealing on cryptocurrency, as no one could stop P2P exchange of bitcoin.