The Central Bank of Nigeria, CBN has defended its decision to place restrictions on cryptocurrency transactions in the country.
The apex bank on Sunday, February 7, 2021, said it followed in the footsteps of Bangladesh, Iran, Kyrgyzstan and other counties to ban the trading of cryptocurrencies in Nigeria.
A statement by Acting Director, Corporate Communications, Osita Nwanisobi, clarified that that the CBN circular of February 5, 2021 did not place any new restrictions on cryptocurrencies.
CorrectNG earlier reported how the regulator ordered banks, and other financial institutions to “identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.”
Doubling on its decision following an uproar from Nigerians, the financial sector regulator argued that the use of cryptocurrencies in Nigeria contravenes the key mandate of CBN as provided in the CBN act (2007).
CBN further highlighted the critical difference between cryptocurrencies and digital currencies.
The statement read;
“The use of cryptocurrencies in Nigeria are a direct contravention of existing law. It is also important to highlight that there is a critical difference between a Central Bank issued Digital Currency and cryptocurrencies. As the names imply, while Central Banks can issue Digital Currencies, cryptocurrencies are issued by unknown and unregulated entities.
”The question that one may need to ask therefore is, why any entity would disguise its transactions if they were legal. 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.
”Many banks and investors who place a high value on reputation have been turned off from cryptocurrencies because of the damaging effects of the widespread use of cryptocurrencies for illegal activities.
”The role of cryptocurrencies in the purchase of hard and illegal drugs on the darknet website called “Silk Road” is well known. They have also been recent reports that cryptocurrencies have been used to finance terror plots, further damaging its image as a legitimate means of exchange.
”More also, repeated and recent evidence now suggests that some cryptocurrencies have become more widely used as speculative assets rather than as means of payment, thus explaining the significant volatility and variability in their prices.”
CBN also stated that it is not the first to place restrictions on the trading of cryptocurrencies in the country as China, Canada, Taiwan, Indonesia, Algeria, Egypt, Morocco, Bolivia, Kyrgyzstan, Ecuador, Saudi Arabia, Jordan, Iran, Bangladesh, Nepal and Cambodia have all placed certain level of restrictions on financial institutions facilitating cryptocurrency transactions.