CBN Orders Banks to End Crypto Activity In Nigeria: How it Concerns You

In what started as a speculation or fake news but turned out to be a shocking truth on Friday, that the Apex Bank in Nigeria, the Central Bank of Nigeria (CBN) has ordered banks and other financial institutions to shuts the accounts of crypto currency exchanges and end all crypto trading, buying and selling and other crypto related activities.

Details of this new stringent regulations are contained in a circular issued by the Apex Bank which has now circulated all over the internet.

What does the regulation mean?

The new regulations released on the official website of the Apex Bank by Mr Bello Hassan, Director of Banking Supervision, and Mr. Musa Jimoh, Director of Payments System Management, mean that you will not be able to use a card from a Nigerian bank or any other financial institution in the country to process any transactions on a crypto exchange. In other words, while virtual currencies remain legal, trading them through an exchange in Nigeria is now almost impossible.

The new rules also ordered all Deposit Money Banks (DMBs), Non-Banks Financial institutions (NBFIs), and Other Banks Financial institutions (OFIs) to identify “persons and or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are shut immediately.

The ruling is an extension of earlier warnings from the bank about the risks associated with digital currencies. The CBN also warned of severe penalties to any bank or financial institution that fails to comply with the directive.

What you should know

You should know that back in September 2020. The Nigerian Securities and Exchange Commission (SEC) recognized crypto as securities with plans to formulate a concrete legal framework for digital assets. The commission further stated,

“issuers or sponsors of virtual digital assets shall be guided by the commission’s regulation. The general objective of regulation is not to hinder technology or stifle innovation, but to create standards that encourage ethical practices.”

One could only wonder why the CBN embarked on such hasty regulations that only hinders innovation without considering the effect it might have on the citizens, foreign investment, and even the economy which is still in recession.

What exactly is Crypto Currency?