December 5, 2023

The Central Bank of Nigeria has explained the reason behind the recent embargo on cryptocurrency trading in the country, as well as those affected by it.

This is even as a member of the Monetary Policy Committee (MPC) disclose that the CBN is not preventing any individual from dealing in cryptocurrency.

Recall that the Central Bank of Nigeria (CBN) had ordered banks in the country to shut down the accounts of cryptocurrency traders. The CBN in its directive, told Deposit Money Banks (DMBs), Other Financial Institutions (OFIs), and Non-Bank Financial Institutions (NBFIs) local financial institutions to stop any transactions in crypto or facilitating payments for crypto exchanges.

The apex bank in the circular signed by Director of Banking Supervision, Bello Hassan, and Director, Payments System Management Department, Musa I Jimoh warned that disobedience to the directive will attract sanctions. “Breaches of this directive will attract severe regulatory sanctions,” the CBN warned.

However, the MPC member while speaking to newsmen on Thursday, explained that what the CBN meant by the circular was deposit money banks under its purview cannot partake in cryptocurrency because it will be illegal.

“CBN is also concerned that bitcoin valuation is excessively speculative, akin to betting, and it will not make sense to run a currency system based gambling,” he said.

“Why people will come charging on CBN Governor Godwin Emiefele over banning banks from digital currencies is inexplicable. Bitcoin and other variants of digital currencies are not only unregulated the world over, but they are now used as weapons by cybercriminals.”

He recalled that the last time cybercriminals hijacked the customer database of one of the Nigerian banks, they demanded ransoms in bitcoin before they released the database.

“And since bitcoin addresses are psedonymous, it is not possible to trace them. The CBN cannot fold its arms and see cryptocurrency destroy the entire banking system with all the unsavoury consequences of banking crisis and bailouts. Turkey had also banned bitcoin because it was becoming a channel for money laundering on an unimaginable scale,” he said.

“So, if any Nigerian wants to deal in digital currencies, bitcoin, or whatever, such person is free to do so, only that there is no platform for a cryptocurrency payment system. Accordingly, such a person could as well go to wherever such platform is legalized since the bitcoin market is virtual 24/7,” he said.

The circular has by the CBN has since attracted widespread condemnation from Nigerians in all spheres of life over what many described as a backward trajectory of the nation’s economy.

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