The Governor of Nigeria’s Central Bank, Godwin Emefiele has stated that Bank’s decision to prohibit deposit money banks, non-banking institutions and Other Financial Institutions from facilitating trading and dealings in cryptocurrency is in the best interest of Nigerian depositors and the country’s financial system.
He said this on Tuesday, while briefing a joint Senate Committee on Banking, Insurance and Other Financial Institutions; ICT and Cybercrime; and Capital Market, on its directive to institutions under its regulation.
He described the operations of cryptocurrencies as dangerous and opaque, adding that the use of cryptocurrency contravened an existing law.
Emefiele said given the fact that cryptocurrencies were issued by unregulated and unlicensed entities made it contrary to the mandate of the Bank, as enshrined in the CBN Act (2007) declaring the Bank as the issuer of legal tender in Nigeria.
He differentiated between digital currencies, which Central Banks can issue and cryptocurrencies issued by unknown and unregulated entities, stressing that the anonymity, obscurity and concealment of cryptocurrencies made it suitable for those who indulge in illegal activities such as money laundering, terrorism financing, purchase of small arms and light weapons and tax evasion.
“Cryptocurrency has no place in our monetary system at this time and cryptocurrency transactions should not be carried out through the Nigerian banking system,” he added and emphasized that the Bank’s actions were not in any way, shape or form inimical to the development of FinTech or a technology-driven payment system. On the contrary, he noted that the Nigerian payment system had evolved significantly over the past decade, surpassing those of many of its counterparts in emerging, frontier and advanced economies boosted by reforms driven by the CBN.
He urged that the issue of cryptocurrency be treated with caution, while assuring that the Bank would continue its surveillance and deeper understanding of the digital space.
He also stressed that the ultimate goal of the CBN was to do all within its regulatory powers to educate Nigerians on emerging financial risks and protect our financial system from the activities of currency speculators, money launderers, and international fraudsters
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