Cryptocurrency: CBN Acted In National Interest, Emefiele Tells Senators

Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele said the 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.

Speaking on Tuesday, February 23, 2021, at 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, Emefiele said the operations of cryptocurrencies are dangerous and opaque.

Besides, he told the lawmakers, that the use of cryptocurrency contravened an existing law, given the fact that they are issued by unregulated and unlicensed entities, contrary to the mandate of the CBN, as enshrined in the CBN Act (2007) which empowers the apex bank to be the issuer of legal tender in Nigeria.

The CBN Governor also 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 like money laundering, terrorism financing, purchase of small arms and light weapons and tax evasion.

While declaring that “Cryptocurrency is not legitimate money” because it is not created or backed by any central bank, Emefiele cited instances of investigated criminal activities that had been linked to cryptocurrencies.

For him, the legitimacy of money and the safety of Nigeria’s financial system was central to the mandate of the CBN, reiterating the CBN’s resolve that “cryptocurrency has no place in our monetary system at this time and cryptocurrency transactions should not be carried out through the Nigerian banking system.”

Emefiele also emphasized that the CBN’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, 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.

While urging that the issue of cryptocurrency be treated with caution, the governor assured that the CBN would continue its surveillance and deeper understanding of the digital space.

He stressed that the ultimate goal 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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