The CBN(Central Bank Of Nigeria) on Friday ordered Commercial Banks and other licenced financial institutions to, with immediate effect, stop facilitating transactions for cryptocurrency exchanges in Nigeria.
The Central Bank of Nigeria stated this in a circular released on Friday, February 5, 2020, which also orders banks to close the accounts of any persons or entities found making any cryptocurrency transaction or operating a cryptocurrency exchange.
The CBN addressed the directive to Deposit Money Banks, Non-bank financial institutions, other financial institutions, and the public, alluding to the risks involved in cryptocurrency.
The CBN referenced its circular from 2017 that warned people and businesses about the risks involved with trading cryptocurrencies. Then, it told banks not to offer any crypto.
However, the regulator did not prevent crypto platforms from making use of banking and payment channels. It only demanded that crypto exchanges meet Know-your-customer (KYC) and Anti-money laundering (AML) requirements that would enable them to meet customer identification, verification, and transaction monitoring requirements.
The crux of the CBN’s 2017 message is that cryptos like Bitcoin, Ripples, Ethereum were not legal tender, and any bank that performs any crypto transaction does so at its own risk.
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In its latest circular, the CBN is basically removing that decision out of the banks’ hands.
Senator Iheyen, Lead Partner at Infusion Lawyers, and President for Stakeholders in Blockchain Technology Association of Nigeria (SiBAN) states that if the CBN planned to develop this kind of measure, one would expect them to carry industry players along, and express their concerns.
“We just saw the publication from nowhere, and within the first one hour, we were trying to verify if it was authentic. It was not even on the CBN website before we knew it, they uploaded, removed, changed it, and re-uploaded again. Possibly due to a typo, they made in the first circular,” he says.
Ihenyen considers the CBN’s move to be without due regard to existing laws and regulations. Even those previously released by the apex bank.
“There’s no law in Nigeria that criminalises crypto, but for the CBN to deny banking access to an entire industry, I see that as arbitrary, and I do not think that is legal,” he argues.
“The CBN has no right to determine which Nigerian citizen has access to financial services unless there is a law, which would be by the National Assembly, that states so. One that prevents people involved in crypto from having access to financial services.”
Ihenyen explains that Nigeria can deny terrorists access to banking services because we have an Anti-terrorism Act in Nigeria that criminalises terrorism. For crypto, however, there’s no such law.
What This CBN Crypto ban means
In a lay man’s language the CBN has successfully disconnected buying of Cryptocurrency from Exchangers via credit card or bank transfer, since the Fintechs that facilitate the payment gateways are been issued a desist order.
If you have your Cryptocurrency on any exchanges you can still withdraw them to your local bank account, even though there are delays with withdrawals in most exchanges at the moment due to the tension and panic in the air which resulted to mass withdrawal by the Crypto users in the country.
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Different exchanges has assured their user that their Cryptos are save as they work things out with the regulators.
Different exchanges has even tried to discouraged users from withdrawing at the moment by reducing their buying rates.
For the Crypto Enthusiasts in Nigeria, the Peer to Peer exchange system is the only way to buy Cryptocurrency at the moment, the P2P system has long been in existence, in fact its the foundation of Cryptocurrency Transactions, although it has faced with issues of trust, scams and fraud.
We hope that the CBN revisits this their decision and make the necessary amends that will favor her citizens, outrightly banning Cryptocurrency Transactions is not a wise decision.
Credits: Techpoint Africa
