Central Bank of Nigeria orders banks to close cryptocurrency accounts

Central Bank of Nigeria (CBN) has directed Deposit Money Banks (DMB), non-bank financial institutions (NBFI) and other financial institutions (OFI) to close all accounts related to cryptocurrencies, effective immediately.

In its letter, CBN said that the restrictions  on  cryptocurrencies is not new.  The central bank through it circular in January 2017 barred financial institutions from using, holding, trading and/or transacting in cryptocurrencies.

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The central bank warned of severe regulatory sanction in cases banks and financial institutions fail to comply with the order.

Nigeria follows the footsteps of countries like China,  Canada,  Taiwan,  Indonesia,  Algeria,  Egypt,  Morocco,  Bolivia, Kyrgyzstan, Ecuador, Saudi Arabia, Jordan, Iran, Bangladesh, Nepal and Cambodia that have imposed certain  level  of  restrictions  on  banks facilitating  cryptocurrency transactions.

Explaining its decision, the central bank in its press statement said: “The  recent regulatory  directive  became necessary  to  protect  the  financial  system  and  the generality  of  Nigerians  (including  the  youth  population)  from  the  risks  inherent  in  crypto assets transactions, which have escalated in recent times, with dire consequences for the integrity of the financial system and financial stability.

“Due to the fact that cryptocurrencies are  largely  speculative,  anonymous  and  untraceable  they  are  increasingly  being  used  for money  laundering,  terrorism  financing  and  other  criminal  activities.  Small  retail  and unsophisticated investors also face high probability of loss due to the high volatility of  the investments in recent times.

“In light of these realities and analyses, the CBN 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,” the statement added.

In March last year, the Supreme Court of India lifted the restriction imposed on the trading of cryptocurrencies by the country’s central bank.