Experts kick as CBN orders closure of crypto accounts

The Central Bank has ordered banks and other financial institutions to identify persons and entities operating cryptocurrency exchanges and close all such accounts.

This drew the ire of experts who criticized the apex bank for not being prepared for modern financial regulation.

The CBN stated that dealing with cryptocurrencies and facilitating payments through it was prohibited in the country.

This was disclosed in a circular on Friday titled ‘Letter to all Deposit Money Banks, non-bank financial institutions and other financial institutions’.

The circular was signed by the Director of Banking Supervision, Bello Hassan; and the Director of Payments System Management Department.

It read, “The Central Bank of Nigeria circular of January 12, 2017 ref FPR/DIR/GEN/CIR/06/010 which cautioned the Deposit Money Banks, non-bank financial institutions, other financial institutions and members of the public on the risk associated with transactions in crypto currency refers.

“Further to earlier regulatory directives on the subject, the bank hereby wishes to remind regulated institutions that dealing with crypto currencies or facilitating payments for crypto currency exchanges is prohibited.

“Accordingly, all DMBs, NBFIs and OFIs are directed to identify persons and/or entities transacting in or operating crypto currency exchanges within their systems and ensure that such accounts are closed immediately.

“Please, note that breaches of this directive will attract severe regulatory sanctions.

“The letter takes immediate effect.”

Commenting on the circular, a professor of capital market at the Nasarawa State University Keffi, Prof Uche Uwaleke, said, “I guess it is because the CBN and the Security and Exchange Commission are not yet ready with regulations guiding crypto asset trading platforms operations in Nigeria.

“I think this directive by the CBN to banks should be seen in the light of the risk that unregulated cryptocurrency trading could pose to the financial system.”

On the other hand, a market expert in cryptocurrency, Ayomide Adunbi-David, said the CBN policy was not encouraging trade and entry of foreign investors into the Nigerian market.

He said, “Generally, everybody is not happy. Personally, I think they are trying to halt the tempo of crypto business in Nigeria to give the big boys enough time to come into the business.

“The policy is not encouraging trade and foreign investors to start business. Other countries are trying to include crypto into their financial system, Nigeria is trying to block it.

“It only means two things: they are trying to frustrate people till they find a means to tax crypto transaction or they are trying to hold it for the main time pending when the big boys come in and cash out big on it. You know the way Nigeria is; it is all about knowing someone.”

Adunbi-David said the Central Bank was trying to restrict traders from funding their bitcoin wallets through Nigerian bank accounts.

He said that Nigerians were the second-largest traders or miners of bitcoin and it would take a lot more than ‘this shallow’ policy to affect the market.