‘Why CBN discourages dealings in cryptocurrency in Nigeria’

By Tunde Opalana

Regulators of the nation’s financial sector on Tuesday unanimously kicked against trading in bitcoin and other forms of cryptocurrency.

Led by the Central Bank of Nigeria (CBN) governor, Dr. Godwin Story on page 4 Story on page 3 Lagos State government and the leadership of Nigerian Ports Authority (NPA) have recorded progress in efforts to proffer a lasting solution to the menace of trucks causing gridlocks in Apapa.

The Senate has urged the Federal Government to collaborate with the various States and Local Government Areas/ Area Councils to urgently design and implement a workable arrangement to deploy well-armed security teams around all schools in the country.

Story on page 3 Emefiele, representatives of financial and anti – graft agencies at an interactive session with the Senate Committee on Banking and Insurance and other Financial Institutions explained why transactions in cryptocurrencies should be discouraged in Nigeria.

Recall that the committee under the chairmanship of Senator Uba Sani was directed at plenary to invite the CBN governor and Director-General, Securities and Exchange Commission (SEC) to give full explanation on the Crypto currencies transactions.

The interactive meeting was meant to shed more light on the benefits and dangers of cryptocurrency.

Buttressing earlier stand by CBN in directing banks in the country to close all cryptocurrency accounts, the CBN Governor, Emefiele reminded everyone that cryptocurrency is an electronic or digital currency by largely unknown persons or entities using computer codes, adding that it is money created out of thin air.

Emefiele said “cryptocurrency is used to describe the activities not players in a dark world where transactions are shrouded in secrecy.

They deal in transaction that they don’t want to be trained and indeed cannot be trained. This should create anxiety for any regulator.

That’s the reason why most regulators kick against it. “We know enough at this stage to decide that the nature significantly threatens our transaction and as you know the CBN had the primary responsibility to protect the interest of every actor in that space.

“That’s the reason we have asked all banks to desist and indeed resist the transaction.

We have asked our IT department to investigate the activities.” He said major players in Crypto trading could facilitate scam, money laundering and create avenue through which kidnap and terrorism can be financed.

He said the CBN’s step was to protect the nation’s financial system and the economy as the decision is in the best interest of every Nigerian who has nothing to hide.

Emefiele further said that the United States, United Kingdom and other European nations agree with Nigeria on this step and that a vast majority of central banks have taken the same position as the CBN.

He, therefore appealed that Nigerians be patient with the apex bank.

The Chairman of the Independent Corrupt Practices and Other Related Offences Commission (ICPC), Prof. Bolaji Owasanoye, SAN, on Tuesday said virtual assets and cryptocurrencies are risky for implementation in Nigeria.

He said, “Virtual and cryptocurrencies pose serious legal and law enforcement risks for Nigeria.

The current National Identification Number registration and linking with SIM cards is a pointer to the fact that insurgents, terrorists, kidnappers, bandits, and drug merchants have used the anonymity of unregistered SIM cards to commit their crimes with relative ease.

“ C r y p t o c u r r e n c i e s guarantees similar anonymity and can easily be used as leverage for terrorist financing and other crimes.

With the NIN registration, cryptocurrencies may become an alternative payment platform for kidnappers and this would be impossible for law enforcement to agencies to trace.”

The ICPC boss cited a case study of a current investigation by the Commission on money laundering involving several hundreds of millions of naira.

According to him, “The main suspect used technology in placing the money in the banking sector.

A sizable amount was traced to several bank accounts but before investigators recovered some of the money, a large proportion had been made to disappear using serpentine ICT-aided transfer schemes that has so far eluded investigators.

“While the persons whose accounts were used have been located, the criminal mastermind has remained invisible and unidentified.

“This real ongoing case is a glimpse into the world of anonymity of virtual or digital transactions. With cryptocurrencies, the wallet of the user of cryptocurrency system only store information, or encrypted links in the Blockchain where transaction confirmation can be found.

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“There is no movement of any ‘currency’ in the real sense of the word. By their very nature, they provide considerable anonymity that is almost impossible to be accessed by unauthorized persons, including law enforcement authorities.”

Prof. Owasanoye identified the use of virtual assets and cryptocurrencies for criminal activities as a major risk associated with them.

He further noted that the Central Bank of Nigeria’s ability to regulate monetary policy will be lost due to the fact that cryptocurrencies are issued by private entities, which are foreign, and not issued or regulated by the bank.

The Security Exchange Commission submitted that establishment/ developing appropriate regulatory and systematic regulatory framework will protect the investment environment.

The Commission argued that the digital transaction platform is new to the Nigerian system, it has to be regulated.

Lamido Yuguda, SEC Director General said countries like Malaysia and South Africa recognized crypto currency, but it is highly regulated.

The Nigerian Financial Intelligence Unit (NFIU) submitted that the decision taken by CBN is in order.