Cryptocurrencies illegal, used for money laundering, terrorism ― CBN

Central Bank of Nigeria (CBN) on Sunday explained that its position on cryptocurrencies espoused in its recent circular will remain for the foreseeable future.

“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 apex bank stated in a statement signed by acting director of Corporate Communications, Osita Nwanisobi.

Cryptocurrencies it explained, are digital or virtual currencies issued by largely anonymous entities and secured by cryptography.  

CBN noted that 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. 

“Mr Buffett believes it is a “gambling device” given that they are mostly valuable because the person buying it does so, not as a means of payment; but in the hope they can sell it for even more than what they paid at some point. 

“During an online forum hosted by the Davos-based World Economic Forum few weeks ago, Andrew Bailey, the Governor of the Bank of England, highlighted the extreme price volatility of cryptocurrencies as one of the biggest flaws and explained that this flaw makes it impossible for them to be used as a lasting means of payment.”  

In light of the fact that cryptocurrencies are issued by unregulated and unlicensed entities, “their use in Nigeria goes against the key mandates of the CBN, as enshrined in the CBN Act (2007), as the issuer of legal tender in Nigeria. 

“In effect, the use of cryptocurrencies in Nigeria are a direct contravention of existing law.”

CBN however, asserted that its actions were not in any way, shape or form inimical to the development of FinTech or a technology-driven payment system. 

“To the contrary, the Nigerian payment system has evolved significantly over the last decade, leapfrogging many of its counterparts in emerging, frontier and advanced economies propelled by reforms driven by the CBN.”

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