Nigeria Apex Bank Orders Banks to Stop Processing Crypto

The Central Bank of Nigeria CBN has directed all Deposit Money Banks, DMBs, NoN-Bank Financial Institutions, NBFIs, and other Financial Institutions, OFIs, to close all the accounts used cryptocurrency operations.

The CBN in a circular BSD/DIR/GEN/LAB/14/001 issued on Friday ordered all financial institutions to identify persons and entities transacting or operating cryptocurrency exchanges within their system.

To ensure that such accounts are closed immediately,” the apex further said any financial institution that breaches this directive that it would attract severe regulatory sanctions. While according to the CBN banks dealing in cryptocurrency or facilitating payments for a cryptocurrency exchange is prohibited. The circular signed by Bello Hassan, Director of Banking Supervision, and Musa Jimoh Director, Payment System Management Department said the order takes immediate effect. They also said the apex bank had in the past “cautioned Deposit Money Banks (DMBs), Non-Bank Financial Institution (NBFI’s), other Financial Institution (OFIs) and members of the public on the risk associated with transactions in cryptocurrency refers.

Meanwhile, reiterating this development, popular cryptocurrency trading platforms have assured Nigerian traders that their funds are safe despite the new directive from the CBN. Luno, a cryptocurrency platform, said customers need not panic as their funds remain safe. The platform urged crypto traders to exercise patience, adding that “there is no need to take any action regarding your account at this time.” Luno explained that Naira deposit methods are currently affected on its platform as a deposit via PayU and flutterwave are unavailable until further notice. “Luno will continue to operate as normal while we seek further clarity from the authorities”.

Some Naira deposits are currently affected; withdrawals are unaffected and will continue to be processed but may take longer than usual. All customer funds are completely safe”, the statement There’s no need to take any action regarding your account at this time. We will update our customers on all incoming development as soon as we receive further information and certainly well advance should withdrawals be affected. Also, reacting to the order, the Binance CEO Zhao advised that traders withdraw their Naira to avoid potential channel issues. He said – “I received notice from our channel partners that NGN deposits and withdrawals will be affected,” the CEO wrote on his official Twitter handle on Friday. Still confirming details on when/how please withdraw your NGN as early as possible to avoid potential channel issue; will share more details as they become available.”

However, in January 2017, CBN had said digital currencies such as bitcoin and others are primarily used in terrorism financing and money laundering. Therefore, considering the anonymity of virtual transactions, it will be recalled that the CBN had in 2018 declared that cryptocurrency is not a legal tender in Nigeria. The apex bank said in the circular that cryptocurrencies such as Bitcoin, Ripples, Monero, Litecoin, Dogecoin, among others. In contrast, Exchanges such NairaEx are not licensed or regulated by the apex bank. The apex bank also issued a warning to people who invest in cryptocurrencies saying they would be unable to seek legal redress in the event of collapse because the law does not protect them.

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