Nigeria’s central bank on Friday ordered banks and financial institutions to close down accounts involved in the transfer or exchange of cryptocurrencies, warning of sanctions it they did not comply. Bitcoin has been in the news recently. Programmer Stefan Thomas was a prospective multi-millionaire, having 7,002 bitcoins (worth at the time approximately US$240 million) stored on a digital wallet. But after forgetting his password and losing access to his coins, Thomas was quoted by media as saying that he had made peace with the loss, noting: “It was … The Central Bank of Nigeria (CBN) has directed banks to close accounts of persons or entities involved in cryptocurrency transactions within their systems. This is according to a circular dated 5th February 2021 distributed to deposit money banks (DMBs), non-bank financial institutions (NBFIs), and other financial institutions (OFIs). “Further to earlier regulatory directives on the […]
Nigeria’s central bank on Friday ordered banks and financial institutions to close down accounts involved in the transfer or exchange of cryptocurrencies, warning of sanctions it they did not comply.
Africa’s largest economy has become a huge market for cryptocurrency trade, but the central bank has warned for several years that the currencies are not regulated or legal tender in Nigeria.
Cryptocurrencies are seen by some Nigerians as a safe haven in a petroleum-reliant economy battered by swings in oil prices damaging shutdowns last year to curb the coronavirus pandemic.
“The bank hereby wishes to remind regulated financial institutions that dealing with cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited,” it said in a statement posted on its website.
It said all banks and financial institutions were directed to identify persons and/or entities involved in cryptocurrency exchanges and close their accounts immediately.
“Breaches of this directive will attract severe regulatory sanctions,” it said.
A spokesman at the bank did not respond to calls seeking more details on the decision.
Digital currencies are popular in Nigeria, where they are seen as ways of easing business in a country known for corruption, currency fluctuations and often sidelined in the past by the global financial system.
Africa’s most populous country is also home to a thriving start-up tech sector which often uses cryptocurrencies.
During #EndSARS protests in October against police brutality, activists turned to social media to call for donations though digital currencies to help support the demonstrations.
Twitter Founder Jack Dorsey even supported the call for bitcoin donations for the Nigerian rallies.
Weeks of protests by thousands of young people shocked the country and forced the government to disband the Special Anti-Robbery Squad or SARS police unit at the heart of the demonstrations.
The protests swelled into an expression of long-standing frustrations over bad governance, with a prolific social media campaign winning support from high-profile celebrities.
But the demonstrations ended weeks later when security forces shot at demonstrators in Lagos — killing at least 12 people, according to Amnesty International. The army denied using live rounds.
Friday’s warning to banks was the latest missive from the central bank on cryptocurrencies.
The central bank has warned since 2017 that digital currencies are not authorised, and that traders and investors in them were at risk as they were not protected by law.
CBN Policy On Cryptocurrencies: Would They Ban My Savings Account? – Investment
Nairaland Forum / Nairaland / General / Investment / CBN Policy On Cryptocurrencies: Would They Ban My Savings Account? (169 Views)
With The New Cbn Policy How Can Someone Receive Fund From United State / How To Turn Cbn Policy Into A Bigger Investment Opportunity! / Leave My N10m In My Savings Account Or Invest It In Treasury Bill? (2) (3) (4)
I don’t really understand this new CBN policy on buying cryptocurrencies, does it mean if I buy or sell bitcoin through my bank account, my account will be blocked even if am using Luno wallet?
I bank with Access Bank, I am afraid, my account might be blocked
That is also my salary account
I need someone to clear the air
I believe the policy will come.into effect from when it was signed, not before. So it is advised to halt all crypto related transactions for the mean time
Buddhistdoor View: Countries and Cryptocurrencies – Invest at Your Own Risk
Bitcoin has been in the news recently. Programmer Stefan Thomas was a prospective multi-millionaire, having 7,002 bitcoins (worth at the time approximately US$240 million) stored on a digital wallet. But after forgetting his password and losing access to his coins, Thomas was quoted by media as saying that he had made peace with the loss, noting: “It was actually a really big milestone in my life where, like, I sort of realized how I was going to define my self-worth going forward. It wasn’t going to be about how much money I have in my bank account.” (Business Insider India)
Recently, European Central Bank director Christine Lagarde called for increased regulation of bitcoin, describing the cryptocurrency as “a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity.” (Reuters) This high-level call for regulation comes as no surprise, since speculators have grown increasingly bullish about bitcoin even as it grows more volatile, its value regularly fluctuating by up to 10 per cent each day. Business Insider noted: “After hitting its record-high of more than US$41,000 on 8 January it fell to close to US$30,000 a few days later before rising again.” A record US$3.7 billion bitcoin options expired on 29 January. The other concern is that, from the perspective of national governments, bitcoin and the broader cryptocurrency sector is “mostly lightly overseen or unregulated,” even with the emergence of global standards on things like anti-money laundering. (Reuters)
Bitcoin is perhaps the best-known of a number of cryptocurrencies, defined by PricewaterhouseCoopers as a “medium of exchange, such as the US dollar, but is digital and uses encryption techniques to control the creation of monetary units and to verify the transfer of funds.” (PwC) Cryptocurrencies function through a technology called blockchain, which is “a decentralized ledger of all transactions across a peer-to-peer network. Using this technology, participants can confirm transactions without a need for a central clearing authority. Potential applications can include fund transfers, settling trades, voting, and many other issues.” (PwC) Central banks around the world warn investors that cryptocurrencies are not issued or guaranteed by the state. According to a 2018 report by the Law Library of Congress, no legal recourse is available to investors in the event of loss, and many countries have noted the opportunities that cryptocurrencies create for illegal activities, such as money laundering and terrorism. (The Law Library of Congress)
At the heart of the debate between cryptocurrency investors and advocates of more traditional models with state oversight is the question: what is a healthy balance between an increasingly popular private means of investment and management of the risks to economic volatility and even national security? How should it be taxed (Israel categorizes cryptocurrencies as assets, while Argentina counts them as being subject to income tax)? Should it be accepted as payment? How can an international standard for cryptocurrencies emerge when regulation is so diverse among different countries? The Law Library of Congress notes: “Not all countries see the advent of blockchain technology and cryptocurrencies as a threat, albeit for different reasons. Some of the jurisdiction [sic] surveyed for this report, while not recognizing cryptocurrencies as legal tender, see a potential in the technology behind it and are developing a cryptocurrency-friendly regulatory regime as a means to attract investment in technology companies that excel in this sector. In this class are countries like Spain, Belarus, the Cayman Islands, and Luxemburg. Some jurisdictions are seeking to go even further and develop their own system of cryptocurrencies.” (The Law Library of Congress)
The attractiveness of cryptocurrencies to investors is not going away. Its allure is based on the idea of circumventing national financial authorities, so there is little incentive (at least to private investors) in the appeal to the benefits of oversight. The potential dangers of cryptocurrencies, however, are clear, and a hyper-libertarian approach to regulation is unacceptable to most national governments. Therefore, a Middle Way (however that way is defined) is the inevitable and most reasonable compromise.
Rather than a wholehearted embrace or rejection (veering between extremes), governments could approach cryptocurrencies in a similar way to how historians study boom-bust cycles, including the global financial crisis of 2007–8. The instruments of investing that led to the crash and global recession were considered perfectly orthodox: property, debt in the form of sub-prime loans, bonds, and bundled assets. But in the end, creations like collateralized debt obligations became so toxic and unwieldy—in some cases, banks were betting against their own packages—that the entire house of cards fell apart. As that period demonstrated, unbridled greed can unleash chain reactions in financial markets, often leading to economic turmoil.
The Buddha taught that if politics and economics are based on our core mental afflictions—in this case, greed—then those systems will inevitably and obviously be characterized by violence, deceit, and injustice. As long as unconstrained avarice and a winner-takes-all attitude dominates the context of financial markets, then cryptocurrencies will lean toward some rather destructive possibilities. However, even orthodox ways of investing are not far behind in their potential to cause financial crises. Furthermore, we are already immersed in an intensely capitalistic vision of being, where everything is commodified as a marketable and “investment-worthy” product, including our personal lives and data. Cryptocurrencies are not so much an aberration but more a logical product of a society that wants as many ways to get rich, with as few constraints, as possible.
In the Sutta Pitaka’s Digha Nikaya (11:85-86), the Buddha said: “Householders, there are five benefits that accrue to a man who performs meritorious acts and practices morality. The first benefit is that he acquires his wealth by honest means.” Given the complexity of reaching a consensus on the value and nature of cryptocurrencies, it is up to governments to ensure basic risks to national security—such as money laundering or terrorism—posed by unfettered use of cryptocurrencies are addressed. That might be the easy part. The longer-term challenge is how cryptocurrencies can become a part of honest and ethical investing.
Walshe, Maurice. 1995. The Long Discourses of the Buddha: A Translation of the Digha Nikaya. Boston, MA: Wisdom Publications.
Bitcoin owner whose story went viral after he lost his wallet password says he has ‘made peace’ with potential $220 million loss (Business Insider India)
A record $3.7 billion in Bitcoin options are set to expire on January 29 as interest in cryptocurrencies surges (Business Insider South Africa)
ECB’s Lagarde calls for regulating Bitcoin’s “funny business” (Reuters)
Making sense of bitcoin, cryptocurrency and blockchain (PWC)
Regulation of Cryptocurrency Around the World (Law Library of Congress)
Listening to the Buddha: how greed, ill-will and delusion are poisoning our institutions (Open Democracy)
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Author: News Bureau
CBN directs banks to close accounts related to cryptocurrencies
The Central Bank of Nigeria (CBN) has directed banks to close accounts of persons or entities involved in cryptocurrency transactions within their systems.
This is according to a circular dated 5th February 2021 distributed to deposit money banks (DMBs), non-bank financial institutions (NBFIs), and other financial institutions (OFIs).
“Further to earlier regulatory directives on the subject, the bank hereby wishes to remind regulated institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited, ” the circular signed by Bello Hassan, director for banking supervision, and Musa Jimoh, director of the payment system management department, read.
“Accordingly, all DMBs, NBFIs and OFIs are directed to identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately.”
The apex bank warned local financial institutions against having any transactions in crypto or facilitating payments for crypto exchanges.
CBN had in January 2017 said digital currencies such as bitcoin, litecoin, and others are largely used in terrorism financing and money laundering, considering the anonymity of virtual transactions.
The bank said virtual currencies are largely used in terrorism financing and money laundering, considering the anonymity of virtual transactions.
“The attention of bank and other financial institutions is hereby drawn to the above risks and you are required to take the following actions actions pending substantive regulation or decision by the CBN,” CBN said in an earlier statement.
“Ensure that you do not use, hold, trade and/or transact in any way in virtual currencies. Ensure that existing customers that are virtual currency exchangers have effective capital AML/CFT controls that enable them to comply with customer identification, verification and transfer, monitoring requirements.
Author: By Abisola Olasupo