Nigeria central bank bans banks from crypto, virtual currency transactions

By Charles Abuede

The Central Bank of Nigeria (CBN) has banned Nigerian banks and other financial and non-financial institutions from dealing in cryptocurrency and other virtual currencies, as well as facilitating exchange or trade using virtual currencies.

In a circular, the apex bank cautioned banks, other financial and non-financial institutions and the general public on the risks associated with transactions in cryptocurrency and said they are prohibited from dealing in it.

Kelvin Amugo, CBN’s director of financial policy and regulation department, who signed the circular, seen by Business A.M., referred to its earliest issued circular to all deposit money banks, non-financial institutions and other financial institutions in 2017, directing them to identify individuals transacting or operating the cryptocurrency exchange within their systems and also have the accounts of such individual closed with immediate effect.

In 2017 the CBN had issued a circular on virtual currency operations in Nigeria, stating that transactions in the currency, such as crypto, are largely untraceable and anonymous, and as such are susceptible to abuse by criminals, especially in money laundering and financing of terrorism.

The banking industry regulator had then directed all banks to ensure that they do not hold, use, trade or transact in virtual currencies (VCs); ensure that customers that are virtual currency exchangers have controls that enable the compliance to customer identification, verification and transaction monitoring requirements and also discontinue any relationship with exchangers and customers where the controls put in place by the virtual currency exchangers are not unsatisfactory.

In this current circular the CBN has reiterated that virtual currencies such as Ripples, Bitcoin, Monero, Litecoin, Dogecoin, Onecoin, among others, stand as one, and as such, are not legal tenders in Nigeria.

However, several financial institutions around the world are on the route to adopting the use of virtual or digital currencies. Also, major e-commerce platforms and challenger banks, are beginning to adopt digitalized payment systems which allow for the exchanges.