The Central Bank of Nigeria on Sunday said it followed in the footsteps of Bangladesh, Kyrgyzstan and other counties to impose outright restrictions on trading cryptocurrencies and other related transactions in Nigeria. 

CBN’s spokesman Osita Nwanisobi said cryptocurrencies were issued by ‘unregulated and unlicensed entities’ that many countries are now moving to check before suffering its adverse effects. 

Peoples Gazette had earlier reported how the Nigerian bankers regulator ordered banks, non-bank financial institutions 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).

The Nigerian bank regulators in the statement highlighted the critical difference between cryptocurrencies and digital currencies.

“There is a critical difference between a Central Bank issued digital currency and cryptocurrencies,” Mr. Nwasinobi said. “As the name implies, while central bank issues digital currencies, cryptocurrencies are issued by unknown and unregulated entities.”

The CBN also explained that the sponsors and users value “anonymity, obscurity, and concealment, raising questions on the legality of the currencies.

“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,” Mr. Nwasinobi added.

The regulator also said its decision was not in any way inimical to the development of FinTech or technology-driven payment solutions.

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.

The CBN has long taken a hardline position against cryptocurrencies, which have become a major unit of commerce across the world in recent years.  

In 2017, CBN said it would not licence cryptocurrencies such as Bitcoin, Ripples, Monero, Litecoin, Dogecoin, Onecoin, amongst others, and any transactions conducted through them would not have the protection of the Nigerian law. 

But after noticing that the crypto markets have expanded despite its 2017 directive, the bank decided to impose an outright ban against crypto use by all financial institutions in Nigeria.