Nigeria’s apex banking regulatory body, the Central Bank of Nigeria, CBN, in a circular dated 5th February 2021, warned financial institutions in the country to stop all transactions involving cryptocurrency.
As a result, all banks, trading institutions and related entities are now prevented from attending to transfers, trade or exchanges involving cryptocurrency and are mandated to close all accounts related to crypto transactions.
However this is not the first time the CBN has placed restrictions on bitcoin trade, in 2007 , the Central Bank of Nigeria “officially outlawed digital currencies.” citing reasons like money laundering and terror financing to prohibit banks to use, hold or transact virtual currencies, and they should ensure “existing customers that are virtual currency traders have effective AML/CFT controls.”
“The Central of Bank of Nigeria’s (CBN) circular of January 12, 2017 ref FPR1DIR/GEN/C1R106/010 which cautioned Deposit Money Banks (DMBs), Non-Bank Financial Institutions (NBFIs), Other Financial Institutions (OFIs) and members of the pubic on the risk associated with transactions in cryptocurrency refers.”
“Further to earlier regulatory directives on the subject, the Bank hereby wishes to remind regulated institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.”
“Accordingly, all DMBs, NBFIs and OFIs 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.”
“Please note that breaches of this directive will attract severe regulatory sanctions. This letter is with immediate effect.”
The implications of this restriction will have global repercussions as Nigeria has recently been recognized as the highest interest in bitcoin globally.
Cryptocurrency exchanges can continue on non-Nigerian platforms who are not tied to the Nigerian regulatory body.