Nigerians react as CBN directs banks to close cryptocurrency accounts

*The government should have a rethink on the Central Bank of Nigeria’s directive on cryptocurrency transactions, as it was wrong to issue such a directive at this time in the economy ─Ex-Vice-President Atiku Abubakar

*But the CBN regulates the banks, and it is its responsibility to protect these financial institutions, says Otunba Henry Fadojutimi, a real estate professional

Isola Moses | ConsumerConnect

The Central Bank of Nigeria’s (CBN) express directive to Deposit Money Banks (DMBs), Other Financial Institutions (OFIs) and Non-Bank Financial Institutions (NBFIs) to close accounts of individuals or groups engaging in cryptocurrencies immediately, has continued to generate diverse reactions from cross-sections of Nigerians, especially on social media platforms.

ConsumerConnect had reported the apex bank in a letter dated February 5, 2021, reminded the DMBs, OFIs and NBFIs as regulated institutions, that dealing in cryptocurrencies, or facilitating payments for cryptocurrency exchanges is prohibited in Nigeria.

The Bank stated in the letter that “the CBN circular of January 12, 2017 Ref FPR/DIR/GEN/CIR/06/010 which cautioned DMBs, NBFIs and OFIs and members of the public on the risks associated with transactions in crypto currency refers.

“Further to other regulatory directive on the subject, the bank hereby wishes to remind regulated institutions that dealing in crypto currencies or facilitating payment from cryptocurrency exchanges is prohibited.”

The CBN noted: “Accordingly, or DMBs, NBFIs and OFIs are advised to identify persons and/or entities transacting in or operating crypto currency exchanges within their system and ensure that such accounts are closed immediately.”

Alhaji Atiku Abubakar, Nigeria’s former Vice-President, in his comments contained in a statement Saturday, February 6 faulted the CBN’s directive to banks on closing cryptocurrency accounts and transactions in the country.

Abubakar stated the Federal Government should have a rethink on its directive on cryptocurrency transactions, contending that it was wrong to issue such a directive at this time in the economy.

The erstwhile Vice-President said the number one challenge facing the country is youth unemployment.

Youth unemployment has already become not just a challenge but an emergency that has affected the nation’s economy and was exacerbating insecurity, he noted.

Alhaji Atiku Abubakar

According to him, what Nigeria currently needs are jobs and an opening up of its economy, following the report that foreign capital inflow into the country is at a four-year low.

He stressed the country has already suffered severe economic losses from the border closure and the far-reaching effects of the Coronavirus (COVID-19) pandemic.

Abubakar also cautioned that introducing policies that would restrict the inflow of capital into Nigeria could harm the economy more.

He urged the Federal Government to revisit the policy that prohibits the dealing and transaction of cryptocurrencies.

Rather than an outright shutdown of cryptocurrency transactions, the government could regulate the sub-sector and prevent any abuse that may be damaging to national security.

The former Vice-President recommended job creation, expansion of the economy, and removal of impediments towards investments as the way forward.

However, Otunba Henry Fadojutimi, a real estate professional based in the United States (US), in blog post on the CBN circular to Nigerian banks on cryptocurrencies Saturday explained that digital currency, which is issued by a country’s central bank, is different from crypto (virtual) currencies.

Fadojutimi stated: “I don’t know of any central bank in the world that supports cryptocurrency. Digital currencies, yes. Cryptocurrencies, No!”

He clarified that the CBN has not stopped people from trading in Bitcoin and other cryptocurrencies (if they want the risk), “all that the CBN has said is that banks should not get involved in the trade.”

According to him, the CBN regulates the banks, and it is its responsibility to protect these financial institutions.

The real estate expert as well likened the regulatory functions of the Bankers’ Bank to those of the Financial Conduct Authority (FCA) in the United Kingdom (UK), which protects the UK Financial industry.

The FCA of the UK issued circular against cryptocurrencies which came into effect in the UK January 2021, he disclosed.

Fadojutimi noted “between 2018 and today, no less than 45 countries around the world have officially written circulars against cryptocurrencies.”

He added the Central bank of Nigeria “has done the right thing as of this moment.”

Reno Omokri, an author, politician and former aide to ex-President Goodluck Jonathan, in his comment via his verified Twitter account rather asked: “Nigeria’s foreign capital inflow is at its lowest level in 4 years at just $9.68 billion, and this is the time the CBN decides to shut down cryptocurrency? In a recession!

Reno Omokri

“How does this make sense? Do they think they will prevent #EndSARS part 2 by destroying Nigeria’s economy?”

Mr. Yemi B. Sadiq, a Strategy Consultant, in Lagos, also stated though he agrees that digital money will feature in the scheme of things in the global economy going forward, the evolution of digital money will be such that the central banks of different countries will be able to regulate them.

Sadiq submitted “the new digital currencies would then be properly regulated to remove current high volatility imposed by speculation and greed. Trading digital currencies will then follow suit….”

He further stated: “All existing cryptocurrencies that were created by individuals or a group of people will die off. The only thing that will remain is the fantastic technology behind them called Blockchain.”

According to him, Blockchain is “a distributed ledger technology that allows transactions to be trusted, tamper-proof, safe and unrepudiated.”

Babatunde O. Gbadamosi @BOGbadamosi also remarked that “the way the CBN is going, both it & the currency it’s regulating may become extinct soon.”

He stressed the sudden decision to ban trading in cryptocurrency & shut down traders’ accounts betrays the kind of insecurity associated with dictators, tyrants & territories on the verge of collapse.”

Whereas Oluwaseun P. @OluwaseunP commented “this CBN/Meffy is in bed with the banks! There’s no policy that doesn’t get the stamp of the bank CEOs.”

“It’s not just CBN trying to shut down crypto; it’s the banks themselves,” said he.

Additional reporting by Gbenga Kayode

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