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CBN shed more light to why banks are ban from dealing with Cryptocurrencies

It was just last week when the Federal Government of Nigeria, ordered all banks within the nation to place a ban on cryptocurrencies, people were complaining the action of the government, the Central Bank of Nigeria on 7th of February 2021, has explained in full detail the reason for its directive to Deposit Money Banks (DMBs) and other financial institutions to stay away from all forms of entities dealing in cryptocurrencies.

Since there have been serious alarms all over the place about this cryptocurrency in Nigeria, the CBN press statement has provided more information about their activities to the general public.

From the press statement, CBN detailing the nature of cryptocurrencies noting that “Cryptography is a method of encrypting and hiding codes that prevent oversight, accountability, and regulation. 

Cryptocurrencies have been ever increasing since the launched of  Bitcoin in 2009, and now accounts for about 68 per cent of all cryptocurrencies.”

The CBN makes it known that its recent restriction is not new at all as it was just a reminder of the earlier circular that was dated January 2017.

Starting that the recent policy has not changed from what was enacted in 2017, The CBN said, it is important to elucidate that the CBN circular of February 5, 2021, did not place any new restrictions on cryptocurrencies, said it has earlier stopped all banks in the country, since January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies, ” 

The CBN said some people used it for speculative purposes rather than payment, referring to the flagship crypto model as an example.

“Repeated and recent evidence now suggests that some cryptocurrencies have become more widely used as speculative assets rather than as means of payment, thus explaining the significant volatility and variability in their prices.

“Because the total number of Bitcoins that would ever be issued is fixed (only 21 million will ever be created), new issuances are predetermined at a gradually decelerating pace.

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Because cryptocurrencies are largely speculative, anonymous, and untraceable, they are increasingly being used for money laundering, terrorism financing, and other criminal activities. Small retail and unsophisticated investors also face a high probability of loss due to the high volatility of the investments in recent times.

In light of these realities and analyses, the CBN has no comfort in cryptocurrencies at this time and will continue to do all within its regulatory powers to educate Nigerians to desist from their use and protect our financial system from the activities of fraudsters.

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