LEGAL/POLICY

War On Terrorism: Central Bank Of Nigeria Outlaws Transaction On Cryptocurrencies

Muhammadu Buhari
574views
  • Orders DMBs, NBFIs, OFIs, Others To Close Crypto Accounts And Do More

By Clifford Agugoesi, Editor-in-Chief

In line with the renewed commitment of the Buhari Administration to tackle insecurity challenges in the country, it has become apparent that one of the government’s strategic approaches in winning the war is by padlocking the briefcases of real or perceived financiers of banditry, insurgency and all forms of terrorism, which is why Nigeria’s apex monetary authority, the Central Bank of Nigeria (CBN), has warned stakeholders in the monetary space that dealing in cryptocurrencies is risky and urges and advises them to apply break on such transactions forthwith.

Dr. Godwin Emefiele

The move by the CBN and other critical government agencies is believed by safety and security analysts, to be an evidence of deliberate and coordinated attempts by the Buhari Administration to fix the manifold security and safety loopholes confronting his country, moreso when belief is thick in the air terrorists are fuelling the embers of insecurity via the use of cryptocurrencies.

According to Wikipedia, a cryptocurrency (or crypto currency or crypto for short) is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership. It typically does not exist in physical form (like paper money) and is typically not issued by a central authority. Cryptocurrencies typically use decentralized control as opposed to centralized digital currency and central banking systems. When a cryptocurrency is minted or created prior to issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.

In a circular from the Banking Supervision Department of the CBN(BSD/DIR/PUB/LAB/014/001) authored by both the Director of Banking Supervision Bello Hassan and Director of Payments System Management Department, Musa I. Jimoh, respectively, the CBN advised deposit money banks, non-bank financial institutions, other financial institutions and the public cryptocurrencies are prohibited within the Nigerian monetary space.

The apex financial institution does not stop at that; it goes further to direct DMBs, NBFIs and OFIs to ”identify persons and/or entities transacting in crypto currency exchanges within their systems and ensure that such accounts are closed immediately,” adding, “please note that breaches of this directive will attract severe regulatory sanctions.”

Already, the CBN policy stance has got many analysts worried the ban on cryptocurrencies could adversely affect many companies that may have dived deep into the space, plus looming fears about job losses.

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