The Central Bank of Nigeria refuses to ease its stance over crypto transactions through local banks sending warnings to customers.
The Nigerian Securities and Exchange Commission recently released a regulatory framework for the crypto industry in Nigeria. The new rule was accepted by many crypto enthusiasts believing it was the first step to more acceptance of digital assets by the government. However, the CBN has refused to toe the line of the SEC and maintains its ban on crypto transactions through local banks.
Banks Warn Investors Against Dealing In Cryptocurrencies
Several reports suggest that local Banks in Nigeria have reiterated the CBN’s stance to their customers. The banks sent emails to investors warning them against using their accounts to carry out any cryptocurrency transactions.
Consequently, they warned that customers who flout the directive would have their accounts closed. In the communique sent, the banks cited the CBN’s earlier instruction issued via a letter with reference number BSD/DIR/GEN/LAB/14/001, dated February 5, 2021. In it, the apex bank directed that all banks identify persons or entities operating Cryptocurrency exchanges within their systems and close their accounts. Concerning this, the bank said,
“In line with the CBN directive, kindly note that any account identified as transacting in or operating Cryptocurrency exchanges within our system will be closed immediately.”
Curiously, the timing of this new directive comes in the wake of the SEC releasing a guideline for the crypto industry. The differing stance shows that the Nigerian government has yet to entirely take a unified view of the sector. However, the CBN says its ban is only for transactions through banks and not a prohibition of other activities.
A possible explanation for the CBN’s anti-crypto position could be a perceived danger to the country’s depleting foreign exchange reserves. The apex bank believes that crypto transactions would cause further depletion of its forex even as the Naira weakens against the dollar. For this reason, they have fined several banks that failed to stop crypto transactions through their systems.
Furthermore, the CBN has limited foreign currency spending on naira cards to boost the country’s FX. Initially, the apex bank directed the banks to reduce the limit to $20. However, it recently urged all banks to stop foreign currency spending using local debit cards. All of these it has done in a desperate attempt to attract more remittances into the country.
Meanwhile, the CBN’s stance may be counterintuitive as crypto transactions can help boost FX inflow. The ease of remittance through crypto and growth in demand for remote workers can help boost forex inflow into Nigeria. Also, the development of blockchain projects in Nigeria can help attract venture funding which would see inflows into the country.
Despite these possibilities, the CBN continues to hold on to its stance. But with the SEC releasing a regulator framework, investors will hope that the apex bank eventually gets on the same page. This will ensure rapid growth and development within the sector in Nigeria.
Do you think the CBN will eventually ease its stance regarding crypto transactions in Nigeria and join the SEC in regulating the industry? Let us know your thoughts in the comments below.
Chris is a crypto enthusiast and a firm believer in the blockchain’s ability to create a new financial paradigm. Through writing, Chris hopes to expose the intricacies of this disruptive technology and how it is beneficial to Africans and developing countries. He aims to give readers a rational and unbiased outlook of the industry by equipping them with the necessary information to make enlightened investment decisions.
