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CBN Opens Investigation Into Bank Accounts Of Companies Involved In #cryptocurrency.

The Central Bank of Nigeria (CBN) has opened investigations into bank accounts of companies involved in the trading of cryptocurrencies with the intention of blocking those with suspicious transactions and fraud.

A top central bank official while giving THISDAY more insight into last week’s decision mandating banks to close all accounts belonging to cryptocurrency traders, also pushed back criticism of the policy, saying the bank won’t abandon its regulatory roles to critics.

The bank also insisted in a statement yesterday by its Director of Communications, Mr. Osita Nwanisobi, that the restriction regime is to protect Nigerians and the financial system.

The CBN, however, got allies yesterday on its ban on cryptocurrency trading through banks as the Association of Bureaux De Change Operators of Nigeria (ABCON), the Arewa Consultative Youth Movement, Ohanaeze Ndi Igbo Youth Movement, Oduduwa Youths, and Middle Belt Youths expressed support for it.

The CBN, last week, had directed banks and other financial institutions to immediately close any accounts dealing in cryptocurrency or facilitating payment for cryptocurrency exchange, with immediate effect.

It also directed banks to expose any individual and entity running such accounts, warning that failure to adhere to the directives would attract strict sanctions.

The apex bank, in a circular, cautioned deposit money banks (DMBs), non-bank financial institutions (NBFIs) and other financial institutions (OFIs) and members of the public on the risk associated with transactions in cryptocurrency.

The circular was signed by the Director of Banking Supervision, Mr. Bello Hassan, and the Director of Payments System Management Department, Mr. Musa Jimoh.

THISDAY reported exclusively on Sunday that the federal government and CBN were hinted by the Federal Bureau of Investigation (FBI) on the activities of fraudsters using cryptocurrencies to bring into the country hundreds of millions of US Dollars illegally obtained from the USA and other western economies, giving rise to the apex bank’s preemptive strike on Friday.

However, the top central bank official who sought anonymity stated that the apex bank has the responsibility of ensuring the safety of the financial system and would not abandon its duty in spite of the mounting criticism of the policy.

He said:

“There are companies acting as crypto exchanges in this country, telling people that they have naira and are willing to exchange crypto for them and they ask such persons to go to their banks to collect the naira. We are investigating the companies and their accounts would be blocked if we detect any suspicious transactions.

China indeed has banned cryptocurrency. But what they (China) did was to create digital money, subject to the country’s regulation. That is electronic money that can stand in place of the country’s banknotes, but not recognised as cryptocurrency.

Cryptocurrency is now the easiest way for people to launder money, without central bankers discovering what they are doing. It has also been seen as a way of financing terrorism.

“The CBN has not said don’t use your crypto. What the CBN has said is that you are not allowed to use the Nigerian banking system or Nigeria’s payment infrastructure to conduct crypto.

“You are not allowed to convert your crypto to naira through any Nigerian bank because we don’t know the business you did to get the crypto.”

You are not allowed to convert your crypto to naira through any Nigerian bank because we don’t know the business you did to get the crypto.”

Reacting to a question that the CBN had earlier given the impression that it was understudying the investment instrument, he said: “We only said we were still trying to understudy it, to see whether we can regulate it. In fact, at this stage, we don’t recognise it; we are saying we are not going to allow it in our payment infrastructure.”

According to him, the ban on the digital investment instrument in the country will not stifle innovation as the central bank will continue to take steps to safeguard the banking system.

Restrictions on Crypto-currency to Safeguard Nigerians, Financial System, CBN Insists

In a statement yesterday, the CBN attributed the ban on cryptocurrency transactions to the need to protect the interest of Nigerians and the financial system from the risks inherent in crypto assets transactions.

It said dealing in cryptocurrency has dire consequences for the integrity of the financial system and financial stability.

Cryptography is a method of encrypting and hiding codes that prevent oversight, accountability, and regulation. While there are a number of cryptocurrencies now in circulation, bitcoin was the first to be introduced in 2009, and now accounts for about 68 per cent of all cryptocurrencies.

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