[By VICTOR NZE]
Central Bank of Nigeria (CBN) has said the restriction placed on financial institutions trading in cryptocurrencies in the country is not a new one, adding further that it had on previous occasions warned operators to desist from it.
According to the CBN, the clarification had become necessary following the trail of sentiments expressed by the general public on the heels of the bank’s ‘reminder to Deposit Money Banks (DMBs) to desist from transacting in / and with entities dealing in cryptocurrencies.’
A statement by the CBN’s Acting Director, Corporate Communications, Osita Nwanisobi, weekend, said the regulatory institution had in two earlier circulars to deposit organizations in the country warned against transactions in cryptocurrencies.
“As regards our recent policy pronouncement, it is important to clarify that the CBN 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 .
“Indeed, this position was reiterated in another CBN Press Release dated February 27, 2018. 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. They have all made similar pronouncements based of the significant risks that transacting in cryptocurrencies portend-risk of loss of investments, money laundering, terrorism financing, illicit fund flows and criminal activities,” the statement read.
The CBN also cited other countries where the transaction is illegal to buttress its position.
“China, Canada, Taiwan, Indonesia, Algeria, Egypt, Morocco, Bolivia, Kyrgyzstan, Ecuador, Saudi Arabia, Jordan, Iran, Bangladesh, Nepal and Cambodia have all placed certain level of restrictions on financial institutions facilitating cryptocurrency transactions,” it said.
Further explaining the rationale for the restriction on cryptocurrency transactions by banks, the CBN said it was aimed at protecting ‘the financial system and the generality of Nigerians (including the youth population) from the risks inherent in crypto assets transactions, which have escalated in recent times, with dire consequences for the integrity of the financial system and financial stability.’
“Due to the fact that cryptocurrencies are largely speculative, anonymous and untraceable they are increasingly being used for money laundering, terrorism financing and other criminal activities. Small retail and unsophisticated investors also face high probability of loss due to the high volatility of the investments in recent times.
“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,” the apex bank stated.