Central Bank of Nigeria has ordered banks and other financial institutions to close customer accounts used in trading cryptocurrencies and other related transactions.
In a circular seen circulating on social media on Friday afternoon, the Nigerian bank regulator ordered deposit money banks, non-bank financial institutions and other financial institutions to “identify persons and/or entities transacting in or operating cryptocurrency exchanges within their systems and ensure that such accounts are closed immediately. “
The CBN has been long taken a hardline position against cryptocurrencies, which have become a major unit of commerce across the world in recent years.
In October last year, at the height of the #ENDSARS protests, the bank restricted some financial institutions from receiving or making crypto payments.
The restricted accounts belonged to predominantly young Nigerians who had either sent or received funds to run the #EndSARS protests. When the major fundraisers, Feminist Coalition, were blocked, a bitcoin wallet was set up which donors used to pour in support from across the world.
The CBN was helpless at blocking the inflow due to cryptocurrencies being run on decentralised monetary systems that no conventional regulator can restrain.
In the past few weeks, trading in Bitcoin and other cryptocurrencies has skyrocketed as the global economy becomes increasingly volatile. Nigerians have started utilising crypto transactions to avoid the numerous challenges faced with traditional money transfer services.
In 2020, crypto marketplace Paxful reported that Nigeria had the world’s second-largest Bitcoin by trading volume. In the last five years, Nigerians have traded 60,215 Bitcoins, or more than $566 million USD, it was reported.
In 2017, CBN said it would not licence cryptocurrencies such as Bitcoin, Ripples, Monero, Litecoin, Dogecoin, Onecoin, amongst others, and any transactions conducted through them would not have the protection of the Nigerian law.