Central Bank of Nigeria (CBN) has directed Deposit Money Banks (DMB), non-bank financial institutions (NBFI) and other financial institutions (OFI) to close all accounts related to cryptocurrencies, effective immediately.
In its letter, CBN said that the restrictions on cryptocurrencies is not new. The central bank through it circular in January 2017 barred financial institutions from using, holding, trading and/or transacting in cryptocurrencies.
The central bank warned of severe regulatory sanction in cases banks and financial institutions fail to comply with the order.
Nigeria follows the footsteps of countries like China, Canada, Taiwan, Indonesia, Algeria, Egypt, Morocco, Bolivia, Kyrgyzstan, Ecuador, Saudi Arabia, Jordan, Iran, Bangladesh, Nepal and Cambodia that have imposed certain level of restrictions on banks facilitating cryptocurrency transactions.
Explaining its decision, the central bank in its press statement said: “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.
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“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 statement added.
In March last year, the Supreme Court of India lifted the restriction imposed on the trading of cryptocurrencies by the country’s central bank.