The Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, has said the bank’s decision to prohibit deposit money banks, non-banking institutions and other financial institutions from facilitating trading and dealings in cryptocurrency is in the best interest of Nigerian depositors and the country’s financial system.
Emefiele stated this yesterday while briefing a joint Senate Committee on Banking, Insurance and Other Financial Institutions; ICT and Cybercrime and Capital Market, on its directive to institutions under the apex bank’s regulation.
Describing the operations of cryptocurrencies as dangerous and opaque, the CBN Governor said the use of cryptocurrency contravened an existing law. He said given the fact that cryptocurrencies were issued by unregulated and unlicensed entities made it contrary to the mandate of the apex bank as enshrined in the CBN Act (2007) declaring it as the issuer of legal tender in Nigeria.
Emefiele, who also differentiated between digital currencies, which central banks can issue and cryptocurrencies issued by unknown and unregulated entities, stressed that the anonymity, obscurity and concealment of cryptocurrencies made it suitable for those who indulge in illegal activities such as money laundering, terrorism financing, purchase of small arms and light weapons and tax evasion.
Citing instances of investigated criminal activities that had been linked to cryptocurrencies, he stated that the legitimacy of money and the safety of Nigeria’s financial system was central to the mandate of the CBN, even as he declared that “Cryptocurrency is not legitimate money” because it is not created or backed by any central bank.
“Cryptocurrency has no place in our monetary system at this time and cryptocurrency transactions should not be carried out through the Nigerian banking system,” he added.
Emefiele also emphasised that the bank’s actions were not in any way, shape or form inimical to the development of FinTech or a technology-driven payment system. On the contrary, he noted that the Nigerian payment system had evolved significantly over the past decade, surpassing those of many of its counterparts in emerging, frontier and advanced economies boosted by reforms driven by the CBN.
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