The Governor, Central Bank of Nigeria (CBN), Mr. Godwin Emefiele says the Bank’s decision to prohibit deposit money banks, non-banking institutions and Other Financial Institutions from facilitating trading and dealings in cryptocurrency is in the best interest of Nigerian depositors and the country’s financial system.
Mr. Emefiele made the declaration on Tuesday, February 23, 2021, while briefing a joint Senate Committee on Banking, Insurance and Other Financial Institutions; ICT and Cybercrime; and Capital Market, on its directive to institutions under its regulation.
Describing the operations of cryptocurrencies as dangerous and opaque, the CBN Governor said the use of cryptocurrency contravened an existing law. He said given the fact that cryptocurrencies were issued by unregulated and unlicensed entities made it contrary to the mandate of the Bank, as enshrined in the CBN Act (2007) declaring the Bank as the issuer of legal tender in Nigeria.
Emefiele, who also differentiated between digital currencies, which Central Banks can issue and cryptocurrencies issued by unknown and unregulated entities, stressed that the anonymity, obscurity and concealment of cryptocurrencies made it suitable for those who indulge in illegal activities such as money laundering, terrorism financing, purchase of small arms and light weapons and tax evasion.
Citing instances of investigated criminal activities that had been linked to cryptocurrencies, he stated that the legitimacy of money and the safety of Nigeria’s financial system was central to the mandate of the CBN, even as he declared that “Cryptocurrency is not legitimate money” because it is not created or backed by any Central Bank.
“Cryptocurrency has no place in our monetary system at this time and cryptocurrency transactions should not be carried out through the Nigerian banking system,” he added.
Mr. Emefiele also emphasized that the Bank’s actions were not in any way, shape or form inimical to the development of FinTech or a technology-driven payment system. On the contrary, he noted that the Nigerian payment system had evolved significantly over the past decade, surpassing those of many of its counterparts in emerging, frontier and advanced economies boosted by reforms driven by the CBN.
While urging that the issue of cryptocurrency be treated with caution, the CBN Governor assured that the Bank would continue its surveillance and deeper understanding of the digital space, stressing that the ultimate goal of the CBN was to do all within its regulatory powers to educate Nigerians on emerging financial risks and protect our financial system from the activities of currency speculators, money launderers, and international fraudsters.