‘Why Nigeria, 7 other countries banned digital currency trading’
MOTOLANI OSENI
No fewer than eight countries across the world including Nigeria have banned crypto trading.
Cryptocurrency is a digital currency that can be used to buy goods and services but uses an online ledger with strong cryptography to secure online transactions.
Just recently, the Central Bank of Nigeria (CBN), had directed all Deposit Money Banks and other financial institutions to close the accounts of anyone discovered to be dealing in cryptocurrencies.
It is, however, worthy of note that other seven countries have banned crypto trading including, China; Bolivia; Morocco; Ecuador; Iran; Bangladesh and Nepal.
For instance, the People’s Bank of China, which is China’s central financial regulatory authority, placed a ban on all domestic and foreign cryptocurrency exchanges in the country in 2017.
China-based financial institutions are also banned from dealing and funding cryptocurrency-related activities.
This move was said to have been made in a bid to curb overseas transactions leading to regulatory compliance evasion, which the government feared would pose a higher risk of fraud.
Also, Bolivia in 2014, through the central bank of Bolivia issued a ban on bitcoin and every other currency not regulated by states, countries, and economic area.
The government of Bolivia says the ban is necessary to protect boliviano, the country’s currency, and to protect citizens from unregulated currencies that could lead them to lose their money.
Similarly, Bitcoin and other digital currencies are currently banned by the Ecuadorian government.
The central bank of Ecuador also prohibits the buying and selling of cryptocurrencies through the internet. The bank maintains that cryptocurrency is not a means of payment in the country.
In 2018, Iran’s central bank announced that it was prohibiting all financial institutions, including banks and credit institutions from dealing in cryptocurrency.
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Buying and selling currencies in the country are also currently prohibited. The bank’s action was said to be in a bid to address the problem of terrorism and money laundering in the country.
While the use of bitcoin is considered illegal in Bangladesh, and 2017, the Bangladesh bank issued a ban on cryptocurrency.
The bank said this is because cryptocurrencies do not conform to the Foreign Exchange Regulation Act, 1947, Anti Terrorism Act 2009 and the Money Laundering Prevention Act, 2012. It asked citizens to refrain from all transactions involving virtual currencies.
In 2017, Bitcoin and other cryptocurrencies became considered as illegal forms of financial tender in Nepal, according to Nepal Rastra bank act and the 2019 foreign exchange regulation act. Shortly after the ban, a dozen individuals were arrested for involvement in illegal bitcoin exchange in the country.
The Nepal government maintains the ban is because bitcoin is not classified as a currency in the country. The country also does not have the technology to regulate cryptocurrency transactions.
In Africa, Morocco’s foreign exchange office and central bank prohibit the use of cryptocurrency for transaction in the country.
Any citizen caught engaging in transactions involving the virtual currency will be fined. Illegal activities such as the sale of drugs and weapons were stated as concerns that led to the ban.
Although, there have been mixed reactions following the CBN directive that all banks and other financial institutions in Nigeria must close accounts of persons or entities involved in cryptocurrency transactions within their systems.
But before now, in January 2017, CBN had said digital currencies such as bitcoin, litecoin, and others are largely used in terrorism financing and money laundering, considering the anonymity of virtual transactions.
In a recent circular signed by Bello Hassan, director for banking supervision, and Musa Jimoh, director of the payment system management, CBN, said: “Further to earlier regulatory directives on the subject, the bank hereby wishes to remind regulated institutions that dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges is prohibited.”
The Head of Banking and Finance Department at the Nasarawa State University Keffi, Professor Uche Uwaleke, in his reaction said, “Given the weighty nature of the directive, I want to believe that the CBN must have consulted relevant stakeholders including the Bankers Committee before taking the decision.
“I am inclined to believe that it was well thought through and not a unilateral decision. The fact is that what the CBN could see in a squatting position, many cannot see standing.
“So, I think the CBN directive should be seen in the light of this fact that the CBN may have information which may not be available to the public.
“In my view, the flaw in that circular is that it did not state the reason why the apex Bank is taking that course of action. It should have done so especially if it’s to do with fraudulent activities and threats to financial system stability.”
