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Central Financial institution of Nigeria Orders Banks to Shut Accounts of Crypto Shoppers – Rising Markets Bitcoin Information

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The Central Bank of Nigeria (CBN) distributed a letter instructing banks and financial institutions to identify and close accounts of cryptocurrency transaction companies. The directive, which came into force immediately, threatens financial institutions that fail to comply with “severe regulatory sanctions”.

Banks take action immediately

Immediately after the letter was published, some banks and other financial service providers began complying with the policy. Binance CEO Changpeng Zhao tweeted that his company had received a message from its Nigerian partners confirming that “naira deposits and withdrawals will be affected.” Other crypto startups like Quidax, Buycoins Africa and Bundle have announced that they will comply with the policy.

The Central Bank of Nigeria is instructing banks to close accounts of crypto customers as remittances via traditional corridors decrease by 97%

Meanwhile, the Nigerian crypto community is angry at the policy, and many are calling the decision backward. Senator Ihenyen, President of Interest Groups for the Blockchain Technology Association of Nigeria (SIBAN), says the CBN needs to explain the decision, especially now after the letter briefly “disappeared” on the CBN website. At the time of writing, a modified version of the letter appeared in place of the original version with typographical errors.

The Central Bank of Nigeria is instructing banks to close accounts of crypto customers as remittances via traditional corridors decrease by 97%

A “lazy” decision

In the meantime, according to Ihenyen, it is “badly aligned” for banks and other financial institutions to block customers simply because of the CBN letter. The SIBAN president also suggests that the CBN may not have “legal or regulatory authority to simply order banks to refuse banking services to a group of people or an entire emerging industry”.

Ihenyen continues:

As I understand it, CBN can only regulate how banking services can be offered to these individuals by applying risk management such as KYC, AML / CFT regulations. In contrast to his letter of January 2017, the total ban is arbitrary, illegal, irresponsible and, with all due respect, rather lazy.

While some commentators have suggested that the CBN simply recycled its 2017 policy, Ihenyen says that view is an “incorrect” one. According to the SIBAN president, who is also an attorney, “the 2017 guideline deprecated cryptocurrency business in Nigeria and completely stopped banks and other financial institutions from trading cryptocurrencies.”

However, the same 2017 directive “gave the same banks and financial institutions the leeway to provide banking services to cryptocurrency exchanges and traders on condition that KYC / AML guidelines are applied.” Unlike 2017, the latest directive completely prohibits banks and other financial institutions from doing so Provision of banking services for individuals involved in cryptocurrency trading and for companies involved in cryptocurrency exchanges.

Decline in the inflow of transfers

While it’s not clear what might have sparked the CBN’s abrupt decision, speculation has begun that the central bank may hit back on an industry that may diminish its influence. This is the view shared by Nathaniel Luz, the leader of Dash in Nigeria. Luz tells news.Bitcoin.com that the decline in remittances (a major source of foreign exchange) could be one of the reasons.

The Central Bank of Nigeria is instructing banks to close accounts of crypto customers as remittances via traditional corridors decrease by 97%

As data from Nairalytics shows, remittances to Nigeria via traditional corridors have decreased from $ 2.05 billion in January 2020 to $ 54.4 million received by September of that year. According to Luz, the CBN is now fighting back with this latest policy as many Nigerians are now switching to crypto-based remittance channels.

Still others have speculated that the CBN guideline may be an attempt to prevent the repetition of protests similar to those spearheaded by the Endsars movement. When authorities tried to stifle the protest by freezing Endsars’ bank accounts, protest leaders began asking for donations in bitcoin.

Meanwhile, some crypto influencers say they want to inform the CBN of the policy, which appears to contradict the stance of another Nigerian regulator, the Nigerian Securities and Exchange Commission (SEC). At the time of writing, the CBN has made no other statement beyond the letter. News.Bitcoin.com will provide updates as more information becomes available.

What do you think of this decision by the CBN? You can share your thoughts in the comments below.

Photo credit: Shutterstock, Pixabay, Wiki Commons

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