The Nigerian government has since declared its stance on the crypto transactions in the country, stating that it prohibits dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges.
Some days ago, the Nigerian Central bank directed that all deposit money banks (DMBs), non-bank financial institutions (NBFIs), and other financial institutions (OFIs) should close accounts related to cryptocurrency transactions or exchanges.
Cryptocurrency companies in Nigeria have reacted by suspending Naira deposits and they stated that withdrawal services will continue to be processed but might take slightly longer time than usual.
Yesterday, the Central Bank of Nigeria (CBN) released a press statement explaining, in detail, the reason for its directive to Deposit Money Banks (DMBs) and other financial institutions to desist from cryptocurrency transactions.
Here are five reasons the Nigerian Central Bank is against cryptocurrency transactions
- CBN believes that transacting in cryptocurrencies portend risk of loss of investments, money laundering, terrorism financing, illicit fund flows and criminal activities. The very name and nature of “cryptocurrencies” suggests that its patrons and users value anonymity, obscurity, and concealment. It is on the basis of this opacity that cryptocurrencies have become well-suited for conducting many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.
- Cryptocurrencies are far greater in volatility when compared to normal currencies. This extreme price volatility makes it impossible for them to be used as a lasting means of payment.
- Cryptocurrencies are issued by unregulated and unlicensed entities. Hence their use in Nigeria goes against the key mandates of the CBN, as enshrined in the CBN Act (2007), as the issuer of legal tender in Nigeria. In effect, the use of cryptocurrencies in Nigeria are a direct contravention of existing law
- Cryptocurrencies are more widely used as speculative assets rather than as means of payment thus explaining the significant volatility and variability in their prices.
- Cryptocurrencies do not have any intrinsic value and do not generate returns by themselves. Investors only buy in the hope that its use and acceptability will rise, thereby pushing up its demand and price
The Apex bank has no comfort in cryptocurrencies at this time and 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..
