Central Bank Of Nigeria Bans Cryptocurrency Exchange In The Country
For the average Nigerian youth, February 5th, 2021 brought with it tales of woe. The news of the Central Bank of Nigeria banning cryptocurrency exchange came as a huge shock to many. Cryptocurrency exchange in Nigeria has been booming for years now, with young people making lots of profit from buying and selling cryptos like Bitcoin and Ethereum.
Today’s circular was CBN’s way of reminding banks of the directives that were given earlier. On January 12th 2017, CBN’s restriction on cryptocurrency began with a circular that was sent to other banks in the country. The circular read:
“The emergence of Virtual Currencies (VC’s) has attracted investments in payment infrastructure that provides new methods of transmitting value over the internet. Transactions in VC’s are largely untraceable and anonymous, making them susceptible to abuse by criminals especially in money laundering and financing of terrorism. VC’s are traded in payment platforms that are unregulated, all over the world. Consumers may therefore lose their money without any legal redress in the event these exchangers collapse or close business…
The attention of banks and other financial institutions is thereby drawn to the above risks and you are required to take the following actions pending substantive regulation or decision by the CBN:
- Ensure that you do not use, hold, trade and/or transact in anyway in virtual currencies;
- Ensure that existing customers, that are virtual currency exchangers have effective AML/CFT controls that enable them to comply with customer identification, verification and transaction monitoring requirements;
- Where banks or other financial institutions are not satisfied with the controls but in place by the virtual currency exchangers/customers, the relationship should be discontinued immediately and;
- Any suspicious transactions by these customers should immediately be reported to the Nigerian Financial Intelligence Unit (NFIU).”
The CBN has allegedly put up these restrictions to curb crime in the country and to restrict money laundering. However, Nigerians have expressed disappointment at their country’s tendency to throw the baby out with the bath water. Some have described this move as an act of regression just like the famous moonwalk dance where the dancer continues to slide backwards.
Platforms like Flutterwave and Piggyvest have begun to adhere to the directives. Just yesterday, Bashir Ahmed, the personal assistant to the President of Nigeria tweeted:
“Young people owe this country the responsibility to deploy their energy and creativity in every field — health, science, education, sports, agriculture, etc. — and bring up innovations that would be in tandem with the changing dynamics of the world. – President @MBuhari, today.”
To Nigerian youths, this tweet is at odds with the recent developments.
What is The Future of Cryptocurrency Trading In Nigeria?
With Cryptocurrency Exchange outlawed in the country, the previously bright future of crypto is now cloudy. Well meaning Nigerians have however encouraged crypto traders and buyers to “hold unto their coins”. They believe that just like in 2017, Cryptocurrency would experience a huge spike in the coming weeks and months due to these same restrictions.
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