A Circular was issued today Friday, 5th of February 2021 by the Central Bank Of Nigeria stating that all Deposit Money Banks (DMBs), Non-Bank Financial Institutions (NBFIs), and other Financial institutions (OFIs) have henceforth been banned from cryptocurrency exchanges servicing.
2017 Circular By CBN
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2021 Circular By CBN
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According to a statement which was signed by the Director of Banking Supervision, Bello Hassan, and Musa Jimoh, Director of Payments System Management Department, here is what the CBN said:)
"Further to earlier regulatory directives on the subject, the bank hereby wishes to remind regulated institutions that dealing in crypto currencies or facilitating payments for cryptocurrency exchange is prohibited"
They also added
"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."
This ban came in as a reminder of an earlier issued circular in 2017, which mentioned that Virtual currencies are susceptible to abuse by criminals because the transactions and untraceable and anonymous and warned Banks against the risk involved in cryptocurrency transactions. When that happened, the financial institutions went ahead to support the services meaning they did not mind the risk. But this time around, the Central Bank of Nigeria have threatened that those who don't adhere will face regulatory sanctions.
Nigeria is the number one country when it comes to Google search interest for Bitcoin. Cryptocurrency became really popular during the #ENDSARS protest when bank accounts of the Protest supporters where being shut down and citizens resorted to the use of cryptocurrency as a means of raising funds to support the course of the protest.
Hopefully, In future the ban will be lifted and financial institutions will be allowed to run cryptocurrency services once again. For now Investors and traders in Nigeria will continue with the carrying out of Peer-to-peer transactions.