CBN Action Can’t Wish Away Crypto Currency- Sen. Abiru, Ex-Polaris Bank CEO

  • As Senate Summons Emefiele, Yuguda

The Senate has mandated its Committees on Banking, Insurance, and Other Financial Institutions; ICT and Cybercrime; and Capital Market to invite the Governor of Central Bank of Nigeria (CBN), Godwin Emefiele, and the Director-General of the Securities Exchange Commission (SEC Nigeria), Lamido Yuguda to appear before them.

They are expected, according to a statement by Ezrel Tabiowo, Special Assistant (Press) to President of the Senate, “to brief the committees on the opportunities and threats of the Cryptocurrency on the nation’s economy and security, and to report back their findings within two weeks.”

The resolution to seek further explanations about last week’s decision of the apex bank to lock out cryptocurrency transactions and operators from the nation’s banking system, even as co-sponsor of the motion, Sen Mukhail Adetokumbo Abiru (APC – Lagos East), warned that while the ban is good because of the challenges it poses, cryptocurrency use cannot be wished away.

“Clearly, what it is telling us is that, it is good to ban because of the challenges it has also presented. But, honestly, the reality is that banning it doesn’t take it away.”

Abiru, the immediate past managing director of Polaris Bank, however advanced side-by-side arguments for and against the accommodation of crypto currency transactions in Nigeria’s financial institutions, adding that the economic benefits associated with Crypto currency transactions cannot be eroded by the CBN ban.

Abiru stressed that “in Nigeria in particular, it is also important to underscore the fact that in the last five years, we have had people trading in cryptocurrency to the tune of over US$500m. That’s to tell you how it is gradually gaining traction.

“Last year in particular, we had over US$140m invested in cryptocurrency. Just like my colleague rightly said, there are challenges that cryptocurrency has also brought to the fore.

“You have the challenge to the financial system stability on its own, that is why the CBN is concerned; you also have the issues around cyber crime and terrorism.

“Now, in particular, we must also mention that last year, during the EndSARS protest – (when) the CBN banned the account of the EndSARS young lads – cryptocurrency was what they resorted to.

He recalled that “in the US, as it is planning to come about the stimulus package of about US$1.9tr, one of the major investors there, Elon Musk, just recently on Monday put in about $1.5bn of his assets into cryptocurrency.

“What that has done is that the value of cryptocurrency has been further enhanced. Today, I understand it is within the region of about US$50,000 per Bitcoin.

“Even our Securities and Exchange Commission also agrees and recognizes cryptocurrency as a financial asset that they need to regulate their framework around,” he argued.

The Senate, thereafter, “mandated the Committees on Banking, Insurance and Other Financial Institutions; ICT and Cybercrime; and Capital Market to invite the Central Bank of Nigeria (CBN) and Securities and Exchange Commission (SEC).”

The motion was sponsored by Senator Istifanus Dung Gyang (PDP – Plateau North), who drew the attention of his colleagues to the recent CBN directive on the subject matter, recalling an earlier directive by the apex bank in January 2017, and February 2018, forbidding banks from using, holding, trading and transacting in Cryptocurrencies.

The CBN decision, he continued, was “predicated on the need to safeguard the Nigerian economy from the adverse effects of the Crypto currency regime which are unregulated digital or virtual currencies that are issued by anonymous entities and secured by cryptography.”

Gyang observed that the CBN considers cryptography as financial method that encrypts and hides codes that prevent oversight, accountability and regulation – thereby violating and contravening existing law as only the Central Bank is authorized by law to issue legal tender.

“Concerned that Crypto currency by nature is anchored on anonymity, obscurity and concealment of its patrons and actors making it difficult if not impossible to trace, track and uncover those that may deploy it for ignoble and illegal usage such as money laundering, terrorism financing, drug purchase, cybercrime, etc;

“Aware that the action and directive of the CBN has attracted sharp reactions from Nigerians and has become a topical subject of National discuss; and

“Realized that Crypto currency is both an opportunity and a threat, hence the Senate has a responsibility to ensure that the nation and citizens do not miss out on the opportunities that Crypto currency offers and in the same vein, mitigate and prevent likely consequential effects on the nation’s economy and security,” Gyang said.

Photo caption: Senate President Ahmed Lawan and Senator Tokunbo Abiru