Mr. Godwin Emefiele, Governor of Central Bank of Nigeria

Cryptocurrencies issued by unlicensed, unregulated entities not legitimate money ─CBN

*Governor of Central Bank of Nigeria Godwin Emefiele clarifies to the Senate Committees that the Bank acted in the best interest of Nigerian depositors and the country’s financial system, as the CBN Act (2007) declares the Bank as the issuer of legal tender in the country

*Cryptocurrencies pose serious legal and law enforcement risks for Nigeria due to its opaque nature and illicit financial flows, says Prof. Bolaji Owasanoye, Chairman of the Independent Corrupt Practices and Other Related Offences Commission

Isola Moses | ConsumerConnect

Describing the operations of cryptocurrencies in the economy as ‘dangerous and opaque’, Mr. Godwin Emefiele, Governor of  Central Bank of Nigeria (CBN), has said the Bank’s decision to prohibit Deposit Money Banks (DMBs), Non-Banking Institutions, and other financial institutions from facilitating trading and dealings in cryptocurrencies is in the best interest of Nigerian depositors and other consumers of financial products and services in the country’s monetary system.

ConsumerConnect reports the CBN Governor stated this at the briefing of 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 Tuesday, February 23, 2021, in Abuja, FCT.

Emefiele, who described the operations of cryptocurrencies as dangerous and opaque, said the use of cryptocurrencies contravened an existing law in the country.

According to him, given the fact that cryptocurrencies are issued by unregulated and unlicensed entities makes 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.

He also differentiated between digital currencies, which Central Banks can issue and cryptocurrencies being issued by unknown and unregulated entities.

The anonymity, obscurity and concealment of cryptocurrencies make 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, he stated.

While giving instances of investigated criminal activities linked to cryptocurrencies, Emefiele declared that the legitimacy of money and the safety of Nigeria’s financial system were central to the mandate of the CBN.

He affirmed 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 noted.

The CBN Chief explained the Bank’s actions were not in any way, shape or form inimical to the development of FinTech, or a technology-driven payment system.

He said on the contrary, 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.

Emefiele urged the stakeholders to treat the issue of cryptocurrency with caution, as he assured the Senate Committees that the Bank would continue its surveillance and deeper understanding of the digital space.

Prof. Bolaji Owasanoye, Chairman of ICPC

The ultimate goal of the CBN is 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, said he.

Mr. Lamido Yuguda, Director-General of Securities and Exchange Commission (SEC), who was also present on the invitation of the Senate Committees, clarified that there was no policy contradiction between the CBN directive and the pronouncements made by the SEC on the subject of cryptocurrencies in the country.

According to Yuguda, SEC made its pronouncement at the time to provide regulatory certainty within the digital asset space due to the growing volume of reported flaws. HE stated that prior to the CBN directive, SEC had in 2017, had long cautioned the public against the risks involved in investing in digital and cryptocurrencies.

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, he said.

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

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

Owasanoye said cryptocurrencies posed serious legal and law enforcement risks for Nigeria due to its opaque nature and illicit financial flows.

According to him, the current move by the Federal Government to link National Identification Numbers with Subscriber Identity Module (SIM) cards attests to the fact that terrorists, kidnappers, bandits, and perpetrators in illegal acts had relied on the shield provided by anonymity to commit heinous crimes.

Senator Uba Sani, Chairman of the Joint Senate Committee, and Chairman, Senate Committee on Banking, Insurance and Other Financial Institutions, earlier in his welcome remarks, 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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