Nigeria is well known for its dependency on cryptocurrencies like Bitcoin. The nation has been battling inflation for years and residents have hence turned towards crypto to act as a hedge against the deteriorating economy. Despite this, reports emerged that Nigerian financial regulators had called for all financial institutions to suspend all accounts that have cryptocurrency deposits in a bid to combat illicit activities.
However, a recent report from local media outlet Today Ng stated that the rumors of the looming ban on cryptocurrencies that have kept the industry at heels over the past weeks was just a mere misunderstanding. The Central Bank of Nigeria, which has been investigating accounts trading crypto, has clarified that it has no problem with the nation becoming a so-called Bitcoin Nation.
The report explains that the central bank’s efforts were just a means to draw a line between crypto-related banking activities and the use of cryptocurrencies by the population. As such, it is completely legal to transact in cryptocurrencies as long as nothing illegal is involved.
The report cites Adamu Lamtek, the Bank’s Deputy Governor, who spoke on behalf of Godwin Emefiele, governor of the Bank at the 30th seminar for Finance Correspondents and Business Editors. Lamtek explained:
“The CBN did not place restrictions on the use of Cryptocurrencies, and we are not discouraging people from trading in it. What we have just done was to prohibit transactions on Cryptocurrencies in the banking sector.”
The statement comes as a response to a letter from the Central Bank of Nigeria which was supposedly sent to local banks and financial institutions, urging them to stop dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges. The letter had sparked nervousness and speculation throughout the nation’s thriving crypto industry.
The letter, signed by the Director of Banking Supervision, stated:
“The Bank hereby wishes to remind regulated institutions that dealing with cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.”
Accordingly, all DMBs [deposit money banks], NBFIs [non-bank financial institutions], and OFIs [other financial institutions] are directed to identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.”
The bank had removed the letter hours after it went live on its official website. Following that, it was neither repeated nor replaced. Experts estimate that the letter was meant to prohibit banking institutions from dealing with cryptocurrencies, not the general public.
Echoes from India
The situation in Nigeria mirrors what’s happening in India. Rumors of the central bank planning to criminalize activities related to cryptocurrencies have been spreading like wildfire. However, the nation’s Financial minister clarified that the government wouldn’t outright ban cryptocurrencies.