May 10, 2021

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Why we banned Cryptocurrency – Central Bank of Nigeria gives reasons

The Central Bank of Nigeria (CBN) has justified the ban on cryptocurrencies, saying it fuels illicit financial flow and terrorism. In a statement, Osita…

The Central Bank of Nigeria (CBN) has justified the ban on cryptocurrencies, saying it fuels illicit financial flow and terrorism.

In a statement, Osita Nwanisobi, Acting Director, Corporate Communications, CBN, said the ban on cryptocurrencies will not have any negative impact on Fintechs as there are other robust platforms they can thrive.

He said in light of the fact that cryptocurrencies are issued by unregulated and unlicensed entities, their use in Nigeria goes against the key mandates of the CBN.

“The use of cryptocurrencies in Nigeria are a direct contravention of existing law. It is also important to highlight that there is a critical difference between a Central Bank issued Digital Currency and cryptocurrencies. As the names imply, while Central Banks can issue Digital Currencies, cryptocurrencies are issued by unknown and unregulated entities” Nwanisobi explained.

“The question that one may need to ask therefore is, why any entity would disguise its transactions if they were legal” the CBN wondered adding that “it is on the basis of this opacity that cryptocurrencies have become well-suited for conducting many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.

“Many banks and investors who place a high value on reputation have been turned off from cryptocurrencies because of the damaging effects of the widespread use of cryptocurrencies for illegal activities.

“The role of cryptocurrencies in the purchase of hard and illegal drugs on the darknet website called “Silk Road” is well known. They have also been recent reports that cryptocurrencies have been used to finance terror plots, further damaging its image as a legitimate means of exchange.

“More also, repeated and recent evidence now suggests that some cryptocurrencies have become more widely used as speculative assets rather than as means of payment, thus explaining the significant volatility and variability in their prices.”