The Central Bank of Nigeria (CBN) has instructed Deposit Money Banks (DMBs), Non-Bank Financial Institutions (NBFIs) and Other Financial Institutions (OFIs), to immediately close the accounts of persons and/or institutions dealing in cryptocurrency.
In a letter on the 5th of February, 2021, referencing a circular in the 12th of January 2017, the CBN reminded the regulated institutions that dealing in or facilitating payments for cryptocurrency was already prohibited and a breach of the directives would result in sanctions.
Cryptocurrency (or “crypto”) is an online digital currency that can be used for the payment of goods and services. It uses an online ledger with strong cryptography to secure online transactions. It gained popularity in the Nigerian scene, with several individuals and institutions trading and deriving benefits from crypto.
According to the president of Bank Customer Association of Nigeria (BCAN) Dr. Uju Ogubunka “Cryptocurrency is not the approved legal tender of Nigeria. The CBN approved the naira as the legal tender of the country. It is within the statutory procedure of CBN that the banks and financial institutions must operate.” He also added the “The CBN is not stopping Nigerians not to deal in cryptocurrency trading but they cannot do it through the banking system.”
With the prohibition placed, several Nigerians have gone ahead to voice their displeasure on the decision by the Central Bank of Nigeria to ban financial institutions dealings with digital currencies.
With #cryptocurrency, SEC took a pragmatic step, CBN took a dumb step. Banning something will never mean that it will not be done, it simply means that many will go underground and the law abiding citizens will be the ones to bear the brunt.
The problem with these restrictive policies is that they starve the real economy. When the CBN banned maize imports, prices shot up, and they had to turn back on the policy slightly.