CBN labels Cryptocurrencies unregulated

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CBN labels Cryptocurrencies unregulated
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The Central Bank of Nigeria (CBN) insisted that its ban on Cryptocurrency was valid, warning that crypto services are unregulated and proned to financial fraud.

The apex bank also urged the public through Deposit Money Banks (DMBs) to desist from cryptocurrencies transactions, saying the intention is to ensure accountability.

Mr Osita Nwanisobi, the bank’s Acting Director of Communications, said that the directive was not new but only a reminder of a 2017 directive to the same effect.

Osita, while making the clarification in a statement in the CBN official website Monday, added that the anonymous nature of cryptocurrencies justified such a directive to check financial crimes and other criminal activities.

“The attention of the CBN has been drawn to various comments and reactions following our recent reminder to DMBs to desist from transacting in, and with entities dealing in cryptocurrencies. Most of these reactions reveal that there appears to be a need to provide further justifications about our position, especially to the general public.

“It is important to state that Cryptocurrencies are digital or virtual currencies issued by largely anonymous entities and secured by cryptography.

“Cryptography is a method of encrypting and hiding codes that prevent oversight, accountability and regulation.

“As regards our recent policy pronouncement, it is important to clarify that the CBN circular of February 5, 2021, did not place any new restrictions on cryptocurrencies.

“All banks in the country had earlier been forbidden, through CBN’s circular dated January 12, 2017, not to use, hold, trade and/or transact in cryptocurrencies.

“Indeed, this position was reiterated in another CBN Press Release dated February 27, 2018,’’ he said.

Nwanibosi said that the directive was not restricted to Nigeria as some other countries in the world had placed similar bans on cryptocurrencies.

“It is also important to note that CBN’s position on cryptocurrencies is not an outlier as many countries, central banks, international financial institutions, and distinguished investors and economists have also warned against its use.

“They have all made similar pronouncements based on the significant risks that transacting in cryptocurrencies portend – risk of loss of investments, money laundering, terrorism financing, illicit fund flows and criminal activities”, Osita said.

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