On the fifth of February 2021, the Central Bank of Nigeria released a circular banning the use of cryptocurrencies in Nigeria. This news raised a lot of criticism and sentiments from Nigerians and while there was no reason for banning cryptocurrencies in the circular, the Central Bank of Nigeria has come out to explain the reason for its decision.
The Central Bank of Nigeria claims that cryptocurrencies are used for laundering money and for terrorist activities within the country, hence the ban on cryptocurrencies in the country.
The Acting Director of Corporate Communications CBN; Nwanisobi Osita, on the 7th of February, said that the Central Bank did not place any new restrictions on cryptocurrencies with the circular put out on the 5th of February, 2021. He said the ban was just an extension of CBN’s stand on cryptocurrencies. According to him, the use of cryptocurrencies for transactions in Nigeria is a direct contravention on already existing law. He also went further to say that there abounds a difference between digital currencies issued by the Central Bank and cryptocurrencies. He said while cryptocurrencies are issued by unknown and unregulated entities, digital currencies can be issued from the Central Bank of a country.
‘The question that one may need to ask therefore is, why any entity would disguise its transactions if they were legal. It is on the basis of this opacity that cryptocurrencies have become well-suited for conducting many illegal activities including money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion’, he said according to Daily Trust.
The reasons for the ban on cryptocurrencies were laid at terrorism and money laundering. Cryptocurrency has been blamed for the purchase of hard and illegal drugs, weapons and what have you.
Cryptocurrency was said to be used in financing terrorism plans because of its untraceability and ease of transfers.
Another reason for the ban is the fact that evidence suggests that cryptocurrencies have become widely utilized as speculative assets instead of as a means of payment which explains the variability and significant volatility in their prices.
While the ban displeases a lot of Nigerians, no one should expect a reversal any time soon.