Image credit: source

Tuesday, February
23, 2021 07:23 PM / by CBN/ Header Image Credit:  Financial Nigeria

 


The Governor, Central Bank of Nigeria (CBN), Mr.
Godwin Emefiele says the Bank’s decision to prohibit deposit money banks, non-banking
institutions and Other Financial Institutions from facilitating trading and
dealings in cryptocurrency is in the best interest of Nigerian depositors and
the country’s financial system.

 

Mr. Emefiele made the declaration on Tuesday,
February 23, 2021, while briefing a joint Senate Committee on Banking,
Insurance and Other Financial Institutions; ICT and Cybercrime; and Capital
Market, on its directive to institutions under its regulation.

 

Describing the operations of cryptocurrencies as
dangerous and opaque, the CBN Governor said the use of cryptocurrency
contravened an existing law.  He said given
the fact that cryptocurrencies were issued by unregulated and unlicensed
entities made it contrary to the mandate of the Bank, as enshrined in the CBN
Act (2007) declaring the Bank as the issuer of legal tender in Nigeria.

 

Emefiele, who also differentiated between digital
currencies, which Central Banks can issue and cryptocurrencies issued by
unknown and unregulated entities, stressed that the anonymity, obscurity and
concealment of cryptocurrencies made it suitable for those who indulge in
illegal activities such as money laundering, terrorism financing, purchase of
small arms and light weapons and tax evasion.  

 

Citing instances of investigated criminal
activities that had been linked to cryptocurrencies, he stated that the
legitimacy of money and the safety of Nigeria’s financial system was central to
the mandate of the CBN, even as he declared that “Cryptocurrency is not
legitimate money” because it is not created or backed by any Central Bank.

 

“Cryptocurrency has no place in our monetary system
at this time and cryptocurrency transactions should not be carried out through
the Nigerian banking system,” he added.

 

Mr. Emefiele also emphasized that the Bank’s
actions were not in any way, shape or form inimical to the development of
FinTech or a technology-driven payment system. On the contrary, he noted that
the Nigerian payment system had evolved significantly over the past decade,
surpassing those of many of its counterparts in emerging, frontier and advanced
economies boosted by reforms driven by the CBN.

 

While urging that the issue of cryptocurrency be
treated with caution, the CBN Governor assured that the Bank would continue its
surveillance and deeper understanding of the digital space, stressing that the ultimate
goal of the CBN was to do all within its regulatory powers to educate Nigerians
on emerging financial risks and protect our financial system from the activities
of currency speculators, money launderers, and international fraudsters.

 

Also speaking, the Director-General of the
Securities and Exchange Commission (SEC), Mr. Lamido Yuguda clarified that
there was no policy contradiction between the CBN directive and the
pronouncements made by the SEC on the subject of cryptocurrencies in Nigeria. He
explained that the SEC made its pronouncement at the time to provide regulatory
certainty within the digital asset space due to the growing volume of reported
flaws.

 

Prior to the CBN directive, he said the SEC had, in
2017, cautioned the public on the risks involved in investing in digital and
cryptocurrency, adding that the CBN, Nigeria Deposit Insurance Corporation
(NDIC) and the SEC between 2018 and 2020 had also issued warnings on the lack
of protection in investments in cryptocurrency.

 

Yuguda further disclosed that following the CBN
directive, the SEC had put on hold the admittance of all persons affected by
CBN circular into its proposed regulatory incubatory framework in order to
ensure that only operators that are in full compliance with extant laws and
regulations are admitted into the framework for regulating digital assets.

 

Similarly, the Chairman of the Independent Corrupt
Practices and Other Related Offences Commission (ICPC), Prof. Bolaji Owasanoye highlighted
the risks inherent in investing in virtual assets and cryptocurrencies in
Nigeria.

 

He explained that cryptocurrencies posed serious
legal and law enforcement risks for Nigeria due to its opaque nature and
illicit financial flows, adding that the current move by the Federal Government
to link National Identification Numbers with SIM cards attested to the fact
that terrorists, kidnappers, bandits and perpetrators in illegal acts had relied
on the shield provided by anonymity to commit heinous crimes. 

 

Earlier in his welcome remarks, the Chairman of the
Joint Senate Committee, and Chairman, Senate Committee on Banking, Insurance
and Other Financial Institutions, Senator Uba Sani, said the committee was on a
fact-finding mission and had no preemptive recommendation or stand and would
make its position known only after it had reviewed the submissions made by
stakeholders.

 

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Related Links and Post on the CBN Action

1.     
SEC Puts on Hold the Assessment of Persons Affected by CBN Directive on
Cryptos
 – Feb 12, 2021

2.    
CBN Responds to Reactions on Regulatory Directive on Cryptocurrencies –  Feb 07, 2021

3.    
Central Banking and the Cryptocurrency
Challenge – Call it like it is
 –  by Tope Fasua, Feb 07, 2021

4.    
CBN Tightens Noose on Cryptocurrency Market – Proshare, Feb 05, 2021

5.     A Thread Explaining What
the CBN Circular Means and Why the CBN issued It
 – Stears
Business, Feb 05, 2021

6.     CBN Circular on CRYPTOCURRENCY:
CBN and SEC Singing Discordant Tunes
 – By Stephen
Azubuike, Stephen Legal, Feb 05, 2021

7.     The Unsettling Dust over
Cryptocurrency Transactions
  – by James Emejo,
ThisDay, Feb 07, 2021

8.     Revealed: How a Criminal
Cartel Hijacked Bank Data, Demanded Ransom in Bitcoins – by Sanya Adejokun,
Tribune, Feb 07, 2021

9.     Feb 05, 2021

10.  More than 1,000
cryptocurrencies have already failed – here’s what will affect successes in
future
– by Gavin Brown and Richard Whittle,
The Conversation, Nov 21, 2019

11.  
Banning Cryptocurrency
will Give Power to Outlaws
 Emeka Okoye, Leadership, 3
years ago

12.   VIDEO: 2017 CIBN forum
discussing blockchain technology in Nigeria
 – WebTV, 2017

13.  Banking and Bitcoin – Can
Crypto Kill the Banks?
– by Ivan on
Tech, Sep 19, 2020

14.  Can Bitcoin Kill Central
Banks?
– by James MCWHINNEY, Investopedia,
Jun 25, 2019

15.  Central Bank Digital
Currency and its impact on the banking system: A need for a new payment system

by Zeb, Innovation & Digital, BankingHub, Aug 22, 2018

16.  Why Central Bank Digital
Currencies will Destroy Bitcoin

by Nouriel Roubini, The Guardian, Nov 19, 2018

17.  (PDF) Fedcoin: A Central
Bank-issued Cryptocurrency
– by JP Konig, Nov 15, 2016

 

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Related Video

Proshare Nigeria Pvt. Ltd. Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

The first video is an excerpt from the 2017 CIBN forum discussing blockchain technology in Nigeria. Mr. Musa Jimoh (the then Deputy Director, Payments CBN) was giving the position of the banking regulator on digital currency. CBN’s position has since evolved as changes occurred in adoption, infrastructure, risks & global regulation.

 

Proshare Nigeria Pvt. Ltd.

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Related News – BlockChain & Cryptos

1.         
Bitcoin Bull Market is
Fueling Another Boom in Blockchain Startup Deals

2.        
Indian
Exchanges Launch Campaign Seeking to Avert Potential Crypto Ban
 – Coindesk
– Feb 05, 2021

3.         
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Granted US’s First National Crypto Bank Charter

4.        
Can Bitcoin
Become the Next Global Reserve Currency?

5.         
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6.        
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Banks Can Catalyze Financial Inclusion Through Digital Currency

7.         
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8.        
Regulating
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9.        
Regulating
Cryptocurrency and Initial Coin Offerings: The Nigerian Perspective – Pt 1

10.     
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Virtual Conference and Exhibition 2020

11.      
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Major Trial of State-Run Digital Currency

12.      
IOSCO Report
Examines How Existing Regulatory Principles Could Apply to Stablecoins

13.      
BIS: Central
Bank Group To Assess Potential Cases For Central Bank Digital Currencies

14.      
Demystifying
Cryptocurrency – A Meristem Report

15.      
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Libra Must Meet Strict Standards – Bank of England

16.      
From
Stablecoins to Central Bank Digital Currencies

17.      
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Currencies: The Rise of Stablecoins

18.     
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19.      
UN Details
How N.Korea Carried Out Crypto and SWIFT Hacks To Amass $2bn To Fund Its
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20.    
Do Young
Nigerians Prefer Cryptocurrency for Payment?

21.      
Blockchain
Offers Efficiency but Untested in Securitization

22.     
UK Financial
Conduct Authority Proposes Ban On Sale Of Crypto-Derivatives To Retail
Consumers

 
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  17. IOSCO Publishes Report on Education of Retail Investors Regarding Risks of Crypto-Assets  

 

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(Excerpt) Read more Here | 2021-02-23 12:01:27

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