The Central Bank of Nigeria (CBN) has given a detailed explanation on why it ordered deposit money banks to desist from transacting in cryptocurrencies.
The apex bank in a statement via Twitter on Sunday, February 7, said the explanation became necessary following reactions that have trailed its directive.
The CBN provided some justifications about its position on the use of cryptos as listed below:
1. The CBN said transacting in cryptocurrencies portend a significant risk of loss of investments.
2. It stated that many countries, central banks, international financial institutions, and distinguished investors and economists have also warned against the use of cryptos.
3. The apex bank noted that cryptocurrencies promote illegal activities such as money laundering, financing of terrorism, illicit fund flows and criminal activities, purchase of small arms and light weapons, and tax evasion.
4. It stated that cryptocurrencies are issued by largely anonymous, unregulated, and unlicensed entities.
5. The bank pointed out that the use of cryptos in Nigeria goes against the key mandates of the CBN and is a direct contravention of existing law as the issuer of legal tender in the country.
6. The CBN noted that the very name and nature of cryptocurrencies suggests that its patrons and users value anonymity, obscurity, and concealment.
7 According to the bank, evidence now suggests that some cryptocurrencies have become more widely used as speculative assets rather than as means of payment.
Meanwhile, the CBN clarified that its actions are not targeted at harming the development of financial technology or a technology-driven payment system.
It explained that its decision is meant to protect the financial system and the generality of Nigerians including the youth population from the risks inherent in cryptos.
In another news, the President Muhammadu Buhari-led administration has been advised by former vice-president Atiku Abubakar not to shut down cryptocurrency business.
According to him, the sector should be regulated instead of an outright shutdown. This was contained in a statement shared on his Facebook page on Saturday, February 6.
The former vice president argued that this is the wrong time for such policies to be introduced.