The Central Bank of Nigeria (CBN) has reacted to the mixed reactions that trailed its ban on cryptocurrency trading in the country last week.
The apex bank-led by Mr Godwin Emefiele had in a circular last week directed commercial banks and other financial and non-financial institutions not to trade or have any relationship with those involved in the digital currency.
It warned that any company caught contravening this directive would be severely sanctioned, noting that the use of any digital currency was illegal in Nigeria.
This action caused the CBN to have many enemies as some commentators claimed the bank was working with the fiscal authorities to frustrate financial technology (Fintech) in the country.
But the apex bank said on the contrary, its action was mainly to protect Nigerians and not kill fintech or a technology-driven payment system.
In a statement issued on Sunday by the acting Director, Corporate Communications, Mr Osita Nwanisobi, the banking sector regulator said some of its reforms have led to the growth of the space over the last decade.
“The CBN would like to assert that our actions are not in any way, shape or form inimical to the development of Fintech or a technology-driven payment system.
“To the contrary, the Nigerian payment system has evolved significantly over the last decade, leapfrogging many of its counterparts in emerging, frontier and advanced economies propelled by reforms driven by the CBN,” a part of the statement said.
“The innovations in Nigeria’s payment system were catalysed by regulatory reforms driven by the CBN which entailed the issuance of a raft of guidelines and regulations on Operations of Electronic Payments Channels in Nigeria; Transaction Switching; Card Issuance and Usage, Licensing of payment service providers; Mobile Money Services, Electronic Payments of Salaries, Pensions, Suppliers and Taxes, Licensing Super Agents in Nigeria; and use of USSD for Financial Services in Nigeria, Super Agents and Agent Banking Operations and Payment Service Banks to mention a few,” it added.
The CBN emphasised that its “regulatory directive became necessary to protect the financial system and the generality of Nigerians (including the youth population) from the risks inherent in crypto assets transactions, which have escalated in recent times, with dire consequences for the integrity of the financial system and financial stability.”
It further explained that the action was taken because “cryptocurrencies are largely speculative, anonymous and untraceable they are increasingly being used for money laundering, terrorism financing and other criminal activities.”
“Small retail and unsophisticated investors also face high probability of loss due to the high volatility of the investments in recent times.
“In light of these realities and analyses, the CBN has no comfort in cryptocurrencies at this time and will continue to do all within its regulatory powers to educate Nigerians to desist from its use and protect our financial system from activities of fraudsters and speculators,” it stated.