TL;DR Breakdown
- The Central Bank of Nigeria(CBN) fines three commercial banks for violating its directive on cryptocurrency transactions.
- The banks sanctioned were Access Bank, Stanbic IBTC Bank, and UBA.
- CBN is not in support of Cryptocurrency.
The Central Bank of Nigeria (CBN) has placed a sanction on three commercial banks in the nation due to their failure to follow its directive – a CBN regulation that prohibits banking systems from aiding cryptocurrency dealings by customers. The commercial banks involved are Access Bank, Stanbic IBTC (Nigerian subsidiary of Standard Bank Group LTD), and United Bank for Africa (UBA). The three financial institutions were ordered to pay a total fine of ₦800 million.
On February 5, 2021, the Apex bank issued a circular instructing all banks to close down customers’ accounts used for any form of cryptocurrency transactions.
Access Bank suffered the bulk of the financial penalty, as they were asked to pay ₦500 million for not closing down numerous customers’ accounts engaged in transactions of virtual assets – per a submission made to the Nigerian Exchange Ltd. Meanwhile, the CBN discovered a cryptocurrency dealing within the UBA system, resulting in an order for the bank to pay a sum of ₦100 million.
Standard IBTC was also fined ₦200 million for violating the same directive when two accounts were alleged to have been involved in crypto transactions. During a conference call with bank investors, the CEO of Stanbic IBTC, Wole Adeniyi made this announcement. However, he stated that the bank had fully complied with the CBN’s instructions and that these transactions were most likely undetected.
The CBN continues to crack down on cryptocurrency.
The CBN, like other financial institutions that have imposed an absolute or implicit ban on cryptocurrency, cited the anonymity of the cryptocurrency system as one of the reasons for enacting such a directive. According to the apex bank, this characteristic makes the digital asset a suitable medium for criminal activities such as money laundering and financing terrorist acts.
Truly, the Central Bank of Nigeria has never been a fan of cryptocurrency. In 2017, the apex bank prohibited banking institutions from holding, using, or dealing in any form of digital currency. Also, CBN issued a warning to its citizens about investing in cryptocurrency. It stated that such investments were not legally protected and further said that citizens who invest in cryptocurrency did so “at their own risk”. These actions by the central bank were followed three years by banning banks from facilitating payments for cryptocurrency transactions. To enforce this, the CBN instructed the closure of accounts that trade in cryptocurrency.
However, cryptocurrency is not illegal in Nigeria; the central bank directive only restricts banks from conducting crypto-related fund transfers. Citizens can still own cryptocurrencies, and crypto exchanges continue to operate in the country.
