On February 5, 2021, the Central Bank of Nigeria (CBN) sent a letter to banks and other financial institutions, indicating that trading in cryptocurrencies and facilitating payment for cryptocurrency exchanges are prohibited. The CBN also encouraged all banks and other financial institutions to identify and terminate the accounts of anyone who trades bitcoin or runs cryptocurrency exchanges.
The letter prompted significant worry among Nigerians, with many worried about the letter’s potential effects on the country’s budding cryptocurrency sector and fintech innovation.
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In response, the CBN issued a press release on February 7, 2021, repeating its previous instructions and outlining why banks and other financial institutions are barred from transacting in cryptocurrencies.
The CBN stated in a press statement that cryptocurrencies are issued by unregistered and unregulated enterprises and that their use in Nigeria is illegal because they are not legal tender. It also mentioned the anonymity of cryptocurrencies as a drawback. It stated that because of its anonymity and lack of KYC, it was prone to illicit activities such as money laundering and terrorism financing.
The SEC published a statement on September 14, 2020, declaring its plan to regulate “digital assets,” which includes cryptocurrency. Following the CBN’s instructions, the SEC was pressed to explain whether the two authorities’ regulations were in conflict.
Following that, on February 11, 2021, the SEC announced that it would work with the CBN to analyze and better understand the highlighted hazards of cryptocurrencies in order to guarantee that adequate regulations are in place if cryptocurrency transactions are allowed in the future.
Recently, after the 279th monetary council meeting that was held today the 25th day of May 2021, Godwin Emefiele who is the Governor of the Central Bank of Nigeria did mention that cryptocurrency might have a place in Nigeria once again.
According to his words,
We have carried out our investigation and we found out that a substantial percentage of our people are getting involved in cryptocurrency which is not the best. Don’t get me wrong, some may be legitimate but most are illegitimate.”
Under cryptocurrency and Bitcoin, Nigeria comes 2nd while on the global side of the economy, Nigeria comes 27th. We are still conducting our investigation and we will make our data available.”
Comparing the economy size to the growth of cryptocurrency transactions, he said, “Do you think that they would allow you to grow your cryptocurrency business to the second position if what is inside is the big deal that is going to profit everyone? It is not that simple.
The CBN Governor, Godwin Emefiele also made some statements consigning the digital assets using the CEO of Tesla, Elon Musk’s uncertainty as an example.
We saw the market collapse. Initially, when Elon Musk tweeted around the time when we said our banking and payment facilities are no longer available for cryptocurrency transactions and he tweeted that he will invest $1.5 billion and the price (Bitcoin) went up. He now tweeted and raised a few concerns and the thing (Cryptocurrency) plunged.
The CBN governor went on to say, “We are committed in the CBN and I can assure everybody that digital currency will come to life even in Nigeria.
According to the statements made by the Governor of the Central bank of Nigeria, we can assume that the use of cryptocurrency might soon be approved.
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