The Central Bank of Nigeria (CBN) has stated that cryptocurrencies promotes illegal activities and raise risks.
This was contained in a statement by the CBN on Sunday. The statement came as a reaction to the criticism following the ban of cryptocurrencies dealings in Nigeria.
“The recent regulatory directive became necessary to protect the financial system and the generality of Nigerians (including the youth population) from the risks inherent in crypto assets transactions, which have escalated in recent times, with dire consequences for the integrity of the financial system and financial stability.
“Due to the fact that cryptocurrencies are largely speculative, anonymous and untraceable they are increasingly being used for money laundering, terrorism financing and other criminal activities.
“Small retail and unsophisticated investors also face high probability of loss due to the high volatility of the investments in recent times.
“In light of these realities and analyses, the CBN has no comfort in cryptocurrencies at this time and will continue to do all within its regulatory powers to educate Nigerians to desist from its use and protect our financial system from activities of fraudsters and speculators.”
The apex bank said that cryptocurrencies “are digital or virtual currencies issued by largely anonymous entities and secured by cryptography.”
“Cryptography is a method of encrypting and hiding codes that prevent oversight, accountability, and regulation.
“While there are a number of cryptocurrencies now in circulation, Bitcoin was the first to be introduced in 2009, and now accounts for about 68 percent of all cryptocurrencies.
“As regards our recent policy pronouncement, it is important to clarify that the CBN circular of February 5, 2021 did not place any new restrictions on cryptocurrencies, given that all banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies.
“Indeed, this position was reiterated in another CBN press release dated February 27, 2018.”
The Central Bank also noted that many countries and their apex financial institutions had also warned against its use.
It stated that China, Canada, Taiwan, Indonesia, Algeria, Egypt, Morocco, Bolivia, Kyrgyzstan, Ecuador, Saudi Arabia, Jordan, Iran, Bangladesh, Nepal and Cambodia had all placed certain level of restrictions on financial institutions facilitating cryptocurrency transactions.
Princess Ada is a Senior Content Creator and Head of Field Reporters at Naija Buzz News. She is a graduate of The Federal Polytechnic Nasarawa, Nasarawa State, where she studied Accounting before joining the media industry. She’s well experienced in Nigeria’s online media space. Ada previously worked as the Head of Business Operations at 1Push.Ng. She is a proud Igbo from Enugu State, South-East Nigeria.