Bitcoin News and Finance
Central Bank of Nigeria Orders Banks to Close Accounts of Crypto Clients as Remittances via Traditional Corridors Drop by 97% Skip to main content

Central Bank of Nigeria Orders Banks to Close Accounts of Crypto Clients as Remittances via Traditional Corridors Drop by 97%

Central Bank of Nigeria Orders Banks to Close Accounts of Crypto Clients as Remittances via Traditional Corridors Drop by 97%

The Central Bank of Nigeria (CBN) has circulated a letter directing banks and financial institutions to identify and close accounts of cryptocurrency transacting entities. The directive, which took immediate effect, threatens “severe regulatory sanctions” to financial institutions that fail to comply.

Banks Taking Immediate Action

Immediately following the letter’s publication, some banks and other financial service providers began complying with the directive. The CEO of Binance, Changpeng Zhao, tweeted that his company had received word from its Nigerian partners confirming that “Naira deposits and withdrawals will be affected.” Other crypto startups like Quidax, Buycoins Africa, and Bundle have said they will obey the directive.

Central Bank of Nigeria Orders Banks to Close Accounts of Crypto Clients as Remittances via Traditional Corridors Drop by 97%

Meanwhile, the Nigerian crypto community is responding to the directive with anger and many are calling the decision retrogressive. Senator Ihenyen, the president of the Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), says the CBN needs to explain the decision especially now after the letter briefly “disappeared” on the CBN website. At the time of writing, an amended version of the letter appeared in place of the original one which had typos.

Central Bank of Nigeria Orders Banks to Close Accounts of Crypto Clients as Remittances via Traditional Corridors Drop by 97%

A ‘Lazy’ Decision

In the meantime, Ihenyen says it is “poor orientation” for banks and other financial institutions to simply block clients based on the CBN letter alone. The SIBAN president also suggests that the CBN may not have “the statutory or regulatory power to simply order banks to deny banking services to a set of persons or an entire emerging industry.”

Ihenyen continues:

As I understand it, CBN can only regulate how banking services can be offered to these persons, applying risks management, such as KYC, AML/CFT regulations. Total ban, unlike its January 2017 letter, is arbitrary, illegal, irresponsible, and with all due respect rather lazy.

While some commentators have suggested that the CBN has simply recycled its directive from 2017, Ihenyen says this view is a “mistaken” one. According to the SIBAN president, who is also a lawyer, “the 2017 directive frowned at transacting in cryptocurrencies in Nigeria and completely restricted banks and other financial institutions from trading in cryptocurrencies.”

However, the same 2017 directive “gave the same banks and financial institutions the leeway to render banking services to cryptocurrency exchanges and traders on the condition that KYC/AML policies are applied.” The latest directive, unlike that of 2017, “completely bans banks and other financial institutions from rendering banking services to persons involved in cryptocurrency trading and entities involved in cryptocurrency exchange.”

Dropping Inflow of Remittances

Although it is not clear what may have prompted the abrupt CBN decision, there is speculation that the central bank is striking back at an industry which may be reducing its influence. This is the view that is shared by Nathaniel Luz, the leader of Dash in Nigeria. Luz explains to news.Bitcoin.com that the drop in remittances (a vital source of foreign exchange) could be one of the reasons.

Central Bank of Nigeria Orders Banks to Close Accounts of Crypto Clients as Remittances via Traditional Corridors Drop by 97%

As data from Nairalytics shows, remittances sent to Nigeria via traditional corridors have been declining from the January 2020 figure of $2.05 billion to the $54.4 million that was received by September in the same year. According to Luz, since many Nigerians are now switching to crypto-based remittance channels, the CBN is now fighting back with this latest directive.

Still, others have speculated that the CBN directive could be an attempt to pre-empt the repeat of protests similar to the one that was spearheaded by the Endsars movement. When authorities attempted to suffocate the protest by freezing Endsars’ bank accounts, protest leaders began to ask for donations in bitcoin.

Meanwhile, some crypto influencers say they want to engage the CBN about the directive which appears to contradict the stance that has been taken by another Nigerian regulator, the Securities and Exchange Commission (SEC) of Nigeria. At the time of writing, the CBN has not issued any other statement beyond the letter. News.Bitcoin.com will be giving updates as more information becomes available.

What do you think of this decision by the CBN? You can share your thoughts in the comments section below.

Labels:

Comments

Post a Comment

Popular posts from this blog

Custodial Lightning Network Service Attack Discovered by LN ‘Newbie’ — Hacker Strikes 6 LN Custodians

On September 18, a Redditor posted to the r/bitcoin forum and explained how he discovered a way to “attack [the] lightning Network’s custodial services.” The Reddit account dubbed “Reckless Satoshi” wanted to figure out if a “discrepancy between real routing fees and service’s transaction fee can be exploited for a profit.” The researcher disclosed that he wanted to see how large the damage could be and said “it is bad.” 6 Lightning Network Custodial Services Attacked, Researcher Discloses Findings to Offenders Prior to Public Disclosure A Redditor called Reckless Satoshi published a disclosure post on r/bitcoin this past Saturday and disclosed how he had found a vulnerability with routing fees and some of the Lightning Network’s custodial services. The research attack was done in good faith and after it was complete he disclosed the bugs to the offending services before publishing his findings. Reckless Satoshi used the Lightning Network (LN) attack on six different services incl...
Post a Comment
Read more

Axie Infinity Down 40% Since Last Week’s Price High, Protocol Revenue Outshines Competitors

Last week, the game token leveraged within the Axie Infinity gaming universe skyrocketed to all-time highs, while other crypto markets remained extremely lackluster. During the last seven days, Axie Infinity’s platform token has dropped significantly in value shedding more than 12%. Meanwhile, the game platform’s smooth love potion token has slid over 8% over the last 24 hours. Axie Infinity Down More Than 40% Since All-Time High Not too long ago, the axie infinity (AXS) token was a topical conversation because it reached an all-time high on July 15. At the time, AXS managed to capture $28.93 per unit and since then it has shed 12.8% during the last seven days. The axie infinity (AXS) token is used within the blockchain-based game that involves battles between token-based creatures called “Axies.” AXS is used for the game’s governance system as well as other actions within the game. At the time of writing axie infinity (AXS) is exchanging hands for $16.70 per coin. AXS/USD on Ju...
Post a Comment
Read more

Play-to-Earn Game From Polker (PKR) Exchange Listing – Endorsed by Akon

The Play-to-Earn NFT based Polker.Game ‘s native token $PKR has been officially listed on the popular centralized exchange BitMart. Polker.game has been in the spotlight recently as Akon, the American R&B superstar and record producer gave his official endorsement of polker stating that the “game is revolutionary” and that Polker is “hands down.. the best play to earn, NFT game in the space.”. With the BitMart listing and celebrity endorsement from Akon, Polker is perfectly positioned to become a major player in the Play-to-Earn league. Watch Akon’s Video Here What is Play-to-Earn? Although not a new concept, play-to-earn has become a trending term due to the popularity of the NFT game AXIE infinity. In the past, previous play-to-earn games have also achieved success – however, thanks to the huge amount of development in the blockchain space in recent years the gaming experience is now massively improved. Play-to-Earn games are essentially free to play and open to anyone and...
Post a Comment
Read more

China to Crack Down on Copyright Infringement Through NFTs

Authorities in China are going after creators of digital collectibles based on other people’s works of art, the use of which was not authorized. The government offensive is part of a campaign to combat online copyright infringement and piracy with the participation of several departments. Regulators in China Move to Strengthen Copyright Supervision of Online Platforms The National Copyright Administration of China (NCAC) has recently launched a campaign against copyright infringement and piracy on the internet, together with the Ministry of Industry and Information Technology, the Ministry of Public Security, and the State Internet Information Office of the People’s Republic. A major objective of the initiative is to improve copyright supervision of online businesses by investigating cases involving the sale and distribution of infringing products on short video, live broadcast and e-commerce platforms, and promptly dealing with infringing content, the agency announced in a press r...
Post a Comment
Read more
Blogarama - Blog Directory