The Central Bank of Nigeria (CBN) has banned commercial banks from serving the accounts of cryptocurrency exchanges and other firms that operate with digital assets.
As part of the ban by the central bank of Nigeria, all banks and financial institutions are required to close the accounts of firms that carry out operations with cryptocurrencies. If banks fail to comply with this directive, they face severe fines.
The Bank of Nigeria reported that earlier commercial banks had already received a warning not to interact with participants in the cryptocurrency market. Meanwhile, the country’s population continues to show great interest in bitcoin. According to Google Trends, Nigeria is ranked # 1 in the world for Bitcoin related searches.
CBN has always been negative about cryptocurrencies and fears their spread. The regulator believes that they can have a bad effect on international monetary policy, and crypto assets cannot be viewed as legal means of payment. Despite this sentiment from the central bank, the Ministry of Finance and the Securities and Exchange Commission of Nigeria believe that innovation should not be hindered. It is much more effective to work out in detail the regulation of the blockchain and cryptocurrency industry, and then amend the legislation accordingly.
The ban by the Central Bank of Nigeria resembles the actions of the Reserve Bank of India, which in 2018 also banned banks from providing services to institutions using virtual assets. Two years later, India’s Supreme Court overturned the RBI directive on the use of cryptocurrencies in the country. However, last month RBI clarified that with the ban it protected banks from financial and reputational risks.
