Cryptocurrency Ban by Central Bank of Nigeria
On Friday, February 5, 2021, the Central Bank of Nigeria (CBN) released a letter prohibiting financial institutions, including Deposit Money Banks and Non-Bank Financial Institutions, from providing services to crypto exchanges in the country.
Hence, the CBN has instructed all financial institutions to immediately close accounts belonging to crypto exchanges and businesses transacting in cryptocurrencies. According to the CBN, failure to comply will result in “severe regulatory sanctions”.
While there has been an uproar in the country, the CBN earlier warned of taking such measures in a circular they released on January 12, 2017, citing the risks associated with transactions in cryptocurrency. In September 2020, the country’s Securities and Exchange Commission further said it would regulate trade in digital currencies to protect investors and promote transparent transactions.
However, Nigerians are particularly suspicious of this directive, believing it to be a direct attack on the EndSARS movement that occurred in October 2020. While cryptocurrency has been in Nigeria for a long time, it skyrocketed in popularity in the wake of this movement against police brutality. The central bank tried to cut funding for the protests by suspending the bank accounts of prominent supporters. However, this prompted a switch to Bitcoin (BTC) and other crypto donations.
The President of the Bank Customer Association of Nigeria (BCAN), however, stated that this new directive doesn’t stop people from trading in cryptocurrencies, but it makes it impossible to do so through the banking system. Even if this is the case, trading in cryptocurrencies will be more difficult.
Furthermore, the largest global cryptocurrency platform, Binance, has temporarily suspended deposits in Nigerian naira following this directive.
Given the country’s high unemployment rate, cryptocurrency trading has been a major way several youths in the country are making ends meet. With this source of livelihood under serious threat, only time will tell what the future holds.
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