It came as shock to the cryptocurrency community in Nigeria, as its apex financial institution, the Central Bank of Nigeria on Friday, February 5, 2021, issued a letter to Deposit Money Banks (DMBs), Non-Bank Financial Institutions (NBFIs), Other Financial Institutions (OFIs) to halt all exchanges involving cryptocurrency.
Signed by Bello Hassan, the Director of Banking Supervision and Musa Jimoh, the Director Payments System Management Department of the Apex Bank in the letter warned Nigerians to be aware of the risk associated with transactions In cryptocurrency in reference to a circular of January 12, 2017 ref FPR/DIR/GEN/C1R,06/010.
An extract from the letter reads:
“Further to earlier regulatory directives on the subject, the Bank hereby wishes to remind regulated institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.
Accordingly, all DMBs, NBFIs and OFIs are directed to identify persons and/or entities transacting in or operating cryptocurrency exchanges within tier systems and ensure that such accounts are closed immediately.
Please note that breaches of this directive will attract severe regulatory sanctions.”
To get a grasp of what this means to the growing cryptocurrency user base in Nigeria, techbuild.africa had a brief chat with Chimezie Chuta, Founder and Coordinator of Blockchain Nigeria User Group.
Chimezie like other cryptocurrency professionals in Nigeria also expressed his complete dismay at CBN’s ill-fated directive.
“It is ill-advised and regressive. At a time when forward-thinking countries are including cryptocurrency into their streams of businesses due to the advantage it offers, it is unfortunate that policymakers and regulating agencies in Nigeria have shown that they aren’t prepared for the future of finance.
The future of finance is decentralized and digital access, not fiat. When the CBN comes out with a policy like this, it shows that people in authority have misplaced priority.”
In the chat, Chimezie disclosed that the apex bank gave no reason for taking the action, stating that the apex bank only referred to a circular issued on January 12, 2017, with ref FPR/DIR/GEN/C1R,06/010.
Chimezie argued that there is a gap between 2017 and 2021.
“A policy was made in 2017 and was reechoed in 2021, this shows that no homework was carried out. The CBN once spent money huge amount of money going around the country, seeking opinion on cryptocurrency assessment, but it appears they have learnt nothing.
“However, nobody can stop a decentralized system of transactions, not even CBN, but they can slow down the wheel of progress, but people will always find their way to buy their freedom.
In as much as crypto isn’t a legal tender in Nigeria, it isn’t also an illegal commodity, unless declared otherwise.
There is no law anywhere that says when people trade on legal commodities, that they are involved in illegal activities.”
According to Chimezie, the CBN’s directive is a complete violation of people’s rights and liberty that banks shouldn’t extend cryptocurrency services to them.
On a probable reason, the CBN issued the directive, Chimezie commented that:
“If they think people are involved in money laundering activity, then it is their duty to use the instrument of the law at their disposal to bring people to book because every exchange in the country involved banks knowing their customers and anti-money laundering policy.
Every single organization ensures this and also the banks abide by the stipulated policy. Bringing a blanket ban on everyone involved on cryptocurrency is an outright act of error in judgment.”
In the chat, Chimezie who has been a blockchain and crypto professional as well as a prominent advocate for digital asset in Nigeria mentioned that the Blockchain Nigeria User Group is looking at several options to seek redress and that the body would soon come out with a joint statement that captures its collective sentiment.
techbuild.africa will keep you updated on new developments coming up on this directive.
Featured Image: Chimezie Chuta, Founder and Coordinator of Blockchain Nigeria User Group.
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