Crypto-currencies: CBN Defends Directive To Banks

The Central Bank of Nigeria, CBN has reacted to the comments, doubts and criticisms trailing its recent directive to Deposit Money Banks, DMBS, to desists from transacting in and with entities dealing in cryptocurrencies.

In a statement on Sunday, CBN’s Acting Director, Corporate Communications Osita Nwanisobi said the directive was to remind the DMBS to enforce an old directive to ensure oversight, enforce transparency and regulation for a volatile currency that is issued by largely anonymous entities and secured by cryptography that prevents due process.

The statement noted 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.

Nwajei said the CBN directive was not an isolated case considering trend global trend among many countries, international finance and banks finance and investors to take appropriate safeguards 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.

Explaining further, the CBN said that “in light of the fact that they are issued by unregulated and unlicensed entities, their use in Nigeria goes against the key mandates of the CBN, as enshrined in the CBN Act (2007), as the issuer of legal tender in Nigeria.

In effect, the use of cryptocurrencies in Nigeria are a direct contravention of existing law.