Nigerian Central Bank Says Its Ban on Crypto Accounts Is Nothing New

The Central Bank of Nigeria said its warning to banks on Friday was not a new position, but a reiteration of its 2017 stance on cryptocurrencies.

AccessTimeIconFeb 7, 2021 at 8:56 p.m. UTC
Updated Sep 14, 2021 at 12:08 p.m. UTC
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The Central Bank of Nigeria (CBN) issued a five-page statement Sunday clarifying its position on cryptocurrencies after a regulatory warning to local banking institutions on Friday sent shockwaves through social media. 

In Sunday’s statement, the CBN said Friday’s letter was only a reminder that cryptocurrencies were not legal tender in Nigeria and was reiterating a position the bank has held since 2017, not imposing new restrictions on the industry. 

“It is important to clarify that the CBN circular of Feb. 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 Jan. 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies,” the statement said. 

The CBN sent a letter to local financial institutions on Friday, ordering them to shut down all bank accounts associated with cryptocurrency trading platforms. In response to the letter, crypto trading platform Binance and local electronic payment apps like Bundle halted deposits. Angered Nigerian crypto users took to Twitter and other social media platforms to express their displeasure.  

The press statement, signed by Osita Nwanisobi, Ag. director of Corporate Communications, goes on to list other countries that have banned its banks from dealing in cryptocurrencies and makes the claim that in China, “cryptocurrencies are completely banned and all exchanges closed as well.” 

While China has imposed a number of restrictions on crypto exchanges and users, it has not outright banned cryptocurrencies entirely.

It also states that cryptocurrencies are issued by “unregulated and unlicensed” entities, and that crypto assets are volatile speculative assets that can be a danger to Nigerian users. 

“The very name and nature of ‘cryptocurrencies’ suggests that its patrons and users value anonymity, obscurity, and concealment,” the statement said. 

In the letter, the CBN assured that this stance will not inhibit the progress of the fintech sector in the country, or its payments ecosystems. The directive became necessary, it said, to protect Nigerians, including its youths from the risks inherent in crypto assets transactions.

“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,” the statement said. 

The letter also stated the high volatility inherent in crypto assets posed a great threat to “small retail and unsophisticated investors” who stand to lose a lot.

“In light of these realities and analyses, the CBN has no comfort in cryptocurrencies at this time. It 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 statement said.

Read CBN's full statement below:

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