Following a circular to all deposit-taking and financial institutions to stay clear of cryptocurrencies last week, the Central Bank of Nigeria (CBN) has come out to clarify its stand further reiterating its position on the matter.
In a 5-page press release published on its website, CBN has said that the statement is a clarification on its position from earlier circulars dated January 2017 and February 2018 forbidding banks in the country from using, holding, trading, and/or trasacting in cryptocurrencies.
“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.”
– Central Bank of Nigeria
The press release goes on to provide a detailed breakdown and explanation of the central bank’s position on the matter.
Some of the key concerns of cryptocurrencies mentioned include:
Risk of investment loss
Money laundering fears
Illicit fund flows and criminal activities
The press release also goes on to point at certain fundamental features of cryptocurrencies that reveal several problems:
They are issued by unregulated and unlicensed entities which goes against the key mandates of the CBN, in effect, a direct contravention of existing law
The anonymous, obscurity, and concealment nature of cryptocurrencies making them well-suited for illegal activities
Some cryptocurrencies are used as speculative assets making them lack intrinsic value
Following condemnation by the fintech community in stalling the development of the space in Nigeria, CBN has gone on to state that it fully supports the growth of the sector by creating an enabling investment environment via regulatory reforms driven by the regulator.
The press release concludes by saying:
“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.”