CBN orders banks to close account of Cryptocurrency traders

CBN orders banks to close accounts of Cryptocurrency traders.

On Friday, February 5, 2021, the Central Bank of Nigeria sent a circular to financial institutions, Non-bank financial institutions and Deposit money bank (DMB) to close the accounts of Cryptocurrency traders. This act would put an end to Cryptocurrency transactions for as long as possible.

The Circular was signed by Musa Jimoh- the director of the payment system management department. It was also signed by Bello Hassan; the director of banking supervision. It read:

“Further to earlier regulatory directives on the subject, the bank hereby wishes to remind regulated institutions that dealing in Cryptocurrencies is prohibited. Accordingly, all DMBs (Deposit money bank), NBFIs (Non-bank financial institutions) and OFIs are directed to identify persons and/or entities transacting in or operating Cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately”

However, this decision as ‘sudden’ as it may seem has actually been building up as far back as 2017 when the CBN stated that digital currencies are used in money laundering and terrorism. The CBN also said digital currencies such as Litecoin, Bitcoin, Ethereum and Ripple are not considered/accepted as legal tender in Nigeria. (A legal tender is a form of money that courts of law recognize as satisfactory form of payment). The Central bank also said the probability of Fraud is high considering that transactions made online are usually anonymous.

This announcement created an uproar because according to Reuters, in June 2020 alone, small Cryptocurrency transfers totaled $56 million in Nigeria. Also, Nigeria is actually No 2 in the Bitcoin market. This therefore explains the massive effect it will have on the numerous people who do digital currency transactions everyday.

To be honest, a little heads up would have been good, at least to prepare people of what is to come and allow them put things in order. A lot of people have actually invested in digital currencies and putting a stop to all transactions will be financially crippling to some people.