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Nigerian Central Bank Explains Why It Bans Cryptocurrency Trading in The Country

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In a recently released document by the Central Bank of Nigeria, which was signed by the Ag. Director, Corporate Communications, Osita Nwanisobi, the CBN gave an explanation on its move that has been causing an outcry in the country.

It would be recalled that the CBN had on Friday, sent a circular to local banks, instructing them to restrict account of users involved in cryptocurrency trading.

The apex bank, in a new circular explained that the directive it sent last Friday, is not a new development on cryptocurrencies, given that all
banks in the country had earlier been forbidden, according to a circular sent in January, 2017.

It is important to clarify that the CBN circular of February 5, 2021 did not place any new restrictions on cryptocurrencies, given that all banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies,” the statement says.

The apex bank added that the directive was only to reiterate the CBN’s stand on cryptocurrency.

The CBN also noted in the statement released yesterday, that it is not the first, neither is it the only country in the world that has placed such restrictions on cryptocurrency:

It is also important to note that the CBN’s position on cryptocurrencies is not an outlier as many countries, central banks, international financial institutions, and distinguished investors and economists have also warned against its use. They have all made similar pronouncements based of the significant risks that transacting in cryptocurrencies portend-risk of loss of investments, money laundering, terrorism financing, illicit fund flows and criminal activities.

CBN laid emphasis on communist country, China, as one of the countries of the world that placed restrictions on cryptocurrency.

Other countries that made CBN’s list include Canada, Taiwan, Indonesia, Algeria, Egypt, Morocco, Bolivia, Kyrgyzstan, Ecuador, Saudi Arabia, Jordan, Iran, Bangladesh, Nepal and Cambodia.

It should be noted that China, which Nigeria owes about $3 billion, placed a total ban on cryptocurrency.

The Asian giant is, however, working to develop its own digital coin, integrate it into its economy, and take it global.

Canadian government, on the other hand, does not recognize digital coin as a legal tender. However, on its official site, the government gave a form of advisement regarding the use of digital coin, tabling the risks that can come from trading in digital coin.

How FBI alerted Nigeria about crypto fraud

In a report by The Guardian, it was gathered that the federal government has been alerted by the United States’ Federal Bureau of Investigation (FBI).

The FBI notified the Nigerian government on the activities of fraudsters using cryptocurrencies to bring into the country hundreds of millions of US Dollars illegally obtained from the USA and other Western economies.

According to the report, the FBI claimed that fraudsters have been sending millions of dollars to Nigeria through cryptocurrencies, making it difficult for the authorities in both Nigeria and the US to trace the illicit monies.

However, before these funds were used to destabilise the Nigerian economy, the CBN had to wield the big stick.

Nigeria is said to be the country with the second highest cryptocurrency transaction in the world.

A source revealed to The Guardian that fraudster remit between $200 and $300 million worth of cryptocurrency every week.

The source also told the guardian that:

The Central Bank and the federal government were clearly alarmed by this development and had to act fast before irreparable damage is done to the economy.”

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