Trading in Cryptocurrencies is not backed by the Central Bank of Nigeria (CBN) Act which recognizes the naira as the only legal tender in the Nigerian financial system, an analyst has said.
The CBN had on Friday, directed Deposit Money Banks (DMBs),
Other Financial Institutions (OFIs) and Non-Bank Financial Institutions (NBFIs)
local financial institutions to close accounts belonging to cryptocurrency
operators.
But a member of the Monetary Policy Committee (MPC) said on
Saturday that the apex bank never prevented any individual from dealing in
cryptocurrency, adding that what the apex bank said was deposit money banks
under its purview cannot partake in cryptocurrency because it will be illegal.
The MPC member, who spoke anonymously, explained that crypto
trading would undermine monetary policy which is anchored on Naira money supply
and demand.
“CBN is also concerned
that bitcoin valuation is excessively speculative, akin to betting, and it will
not make sense to run a currency system based gambling,” he said.
Continuing, he said: “Why people will come charging on CBN
Governor Godwin Emiefele over banning banks from digital currencies is
inexplicable. Bitcoin and other variants of digital currencies are not only
unregulated the world over, but they are now used as weapons by cyber
criminals.”
The MPC member said the
last time cybercriminals hijacked the customer database of one of the Nigerian
banks, they demanded ransoms in bitcoin before they released the database.
“And since bitcoin addresses are pseudonymous, it is not
possible to trace them. The CBN cannot fold its arms and see cryptocurrency
destroy the entire banking system with all the unsavoury consequences of the banking crisis and bailouts. Turkey had also banned bitcoin because it was
becoming a channel for money laundering on an unimaginable scale,” he said.
“So, if any Nigerian wants to deal in digital currencies,
bitcoin, or whatever, such person is free to do so, only that there is no platform for a cryptocurrency payment system.
Accordingly, such a person could as well go to wherever such platform is
legalised since the bitcoin market is virtual 24/7,” he said.
In a letter forwarded to all DMBs, OFIs and NBFIs, the regulator noted that “breaches of this directive will attract severe regulatory
sanctions.”
The circular signed by Director of Banking Supervision, Bello
Hassan said:” The CBN circular of January 12, 2017, which cautioned DMBs, NBFIs
and OFIs and members of the public on the risks associated with transactions in
cryptocurrency refers”.
“Further to other regulatory directives on the subject, the
bank hereby wishes to remind regulated institutions that dealing in crypto
currencies or facilitating payment from cryptocurrency exchanges are prohibited.
“Accordingly, or DMBs, OFIs, NBFIs, are advised to identify persons and /or entities transacting in or operating cryptocurrency exchanges within their system and ensure that such accounts are closed immediately.”
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